How will the RM6.2 billion offer be financed via SPV bonds?

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Government to Finance Highway Acquisitions Through Bond Issuance

The Malaysian government's proposed RM6.2 billion acquisition of four Klang Valley highways will be financed through a special purpose vehicle (SPV) that will issue bonds. This SPV, wholly owned by the Minister of Finance (Incorporated), will raise the necessary funds via bond issuance to complete the acquisition of Lebuhraya Damansara Puchong (LDP), Sistem Penyuraian Trafik KL Barat (SPRINT), Lebuhraya Shah Alam (KESAS), and SMART Tunnel (SMART).
Bond Issuance for Acquisition Funds

The RM6.2 billion required for the acquisition of the four tolled highways will be raised through the issuance of bonds by the designated SPV. This financial instrument will serve as the primary mechanism to secure the capital needed to purchase the concessionaires.
Self-Financing Through Congestion Charges

Following the acquisition, the revenue generated from congestion charges is expected to be sufficient to service the debt incurred from the bond issuance. Additionally, these charges will cover the ongoing operation and maintenance costs of the highways, thereby ensuring the entire acquisition and operational framework is self-financing without necessitating additional budgetary allocations from the Ministry of Finance.
No Direct Government Expenditure

A key aspect of the financing plan is that the acquisition of these highways will not require any direct expenditure from the government's budget. The self-financing nature of the deal, driven by congestion charge collections, means the financial burden is intended to be borne by the users of the highways themselves through these charges, rather than by taxpayers.
Projected Savings and Future Model

The acquisition is projected to yield significant savings for motorists, estimated at RM180 million annually. If successful, this model of acquiring highway concessions through SPV-backed bond issuances and subsequent self-financing via toll or congestion charges is intended to be applied to other tolled highways in the future.

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How will the RM6.2 billion offer be financed via SPV bonds?

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