Malaysia raised US$1.5 billion in its first dollar bond sale in five years, bolstering funding as the nation grapples with a fuel subsidy bill that’s likely to more than double from an initial goal due to the Iran war.
The government sold Islamic securities, or sukuk, in two parts to help fund projects including infrastructure as well as refinance existing obligations.
It priced a US$850 million note due in April 2032 to yield 4.612% and sold a US$650 million tranche maturing in July 2036 to yield 4.949%.
Malaysia said the bonds were 4.7 times oversubscribed, with the strong demand allowing the government to tighten final pricing by 30 basis points from the initial price, recording the tightest ever spreads for the country’s global sukuk offerings.
“The strong oversubscription with the tightest ever spreads reflects global investors’ continued confidence in Malaysia’s economic prospects and policy credibility,” finance minister II Amir Hamzah Azizan said in a statement.
Malaysia’s economic growth has surpassed expectations in recent quarters as robust domestic demand, a surge in investment tied to semiconductors and artificial intelligence and electronics exports countered the impact of the war in the Middle East.
Gross domestic product rose 5.8% in the three months through June from a year earlier, beating expectations.
The nation’s return to the dollar bond market comes amid growing global uncertainties with US president Donald Trump threatening to step up strikes on Iran.
The US will also be collecting new levies from most major trading partners as the Trump administration rebuilds its tariff wall.
Putrajaya has warned that it may not meet its fiscal deficit targets for this year as elevated global oil prices have swelled its fuel subsidy bill due to disruptions caused by the Middle East conflict.
Prime Minister Anwar Ibrahim said last month that Malaysia’s spending on petrol and diesel subsidies could climb to RM40 billion this year if current market prices persist. That’s more than double the RM15 billion allocated for subsidies in the 2026 budget.
The government will present its budget for next year in early October.