The Maldives government has issued additional USD 200 million in sukuk, bringing the total to USD 500 million.
In April, the first sukuk, worth USD 200 million, was issued to cover state expenses for 2021. The government established a special purpose vehicle (SPV) with a 100 percent government-owned asset, Dharumavantha Hospital, to issue the sukuk.
A week later, another USD 100 million sukuk was sold as a tap issuance under the terms of the sukuk.
According to the finance ministry, the sukuk was used to repay a substantial portion of the Yameen administration’s USD 250 million Eurobond, which is due to mature in 2022.
The finance ministry revealed that, in addition to the USD 300 million sukuk issued in April, an additional USD 200 million sukuk was issued on Thursday.
The USD 200 million sukuk, with a five-year repayment period and a coupon or interest rate of 9.875 percent, was sold as a tap issuance under the sukuks issued in April. As a result, the total amount of sukuk issued in 2021 has reached USD 500 million.
The finance ministry stated that the sukuk, which has been oversubscribed three times, has piqued the interest of investors from all over the world, including Europe, the United States, Asia, and the Middle East.
The finance ministry claimed the increased interest from investors from all over the world is a clear indication that the country’s economy is on the right track.
Furthermore, the finance ministry forecasted that the country’s GDP would grow by 22.7 percent in 2021, and that it would be able to return to pre-pandemic levels by early 2023.
The Maldives’ public debt is currently equal to 103 percent of GDP, according to the Maldives Monetary Authority. The central bank also predicted that, with the expected increase in GDP, the public debt would continue to fall in relation to GDP.
Moreover, Moody’s, a bond credit rating firm, has downgraded Maldives’ credit rating as concerns grow over the possibility of debt extension to manage state expenditure.
In addition to Moody’s, several other international financial institutions, including the World Bank and the International Monetary Fund, have expressed concern about the Maldives’ long-term debt situation, urging the Maldives government to develop a debt-reduction strategy.
The finance ministry, however, disputed Moody’s downgrade of the credit rating, claiming that the Maldives had not yet encountered a situation in which debts could not be serviced and that loans would not be defaulted on.