Putrajaya: The Public Sector Home Financing Board (LPPSA) is set to make history by launching its first-rated sukuk programme next year, a strategic move aimed at expanding its funding ecosystem while supporting the government’s efforts in prudently managing the country’s liabilities.
According to BERNAMA News Agency, Chief Executive Officer (CEO) Mohd Farid Nawawi stated that the proposed establishment of a sukuk programme of up to RM25 billion is expected to achieve an ‘AAA’ credit rating. This rating is based on LPPSA’s strong financial fundamentals, stable salary deduction model, and excellent financial management record since its establishment under the Ministry of Finance in 2016.
He further explained that this initiative demonstrates that LPPSA does not rely solely on the ‘government guarantee’ but is proactively seeking alternative mechanisms to balance its funding needs. Mohd Farid emphasized the government’s aspirations under the Fiscal Responsibility Act to strengthen the country’s fiscal position, and LPPSA’s commitment not to indirectly burden the national guarantee ceiling.
Mohd Farid expressed confidence in LPPSA’s stand-alone credit quality, highlighting the agency’s strong assets and stable monthly collections. He noted that achieving an ‘AAA’ rating would attract investors and help the government optimize the management of the country’s contingent liabilities.
The recent collaboration between LPPSA and HSBC Amanah for the Receivables Financing-i (RF-i) facility worth RM1 billion exemplifies market confidence in LPPSA’s credit without a government guarantee. Mohd Farid described this collaboration as a success, demonstrating financial institutions’ acceptance of LPPSA’s financial and operational strength.
With a non-performing loan (NPL) rate remaining below one per cent, LPPSA reflects healthy asset quality. Mohd Farid acknowledged minor challenges involving military personnel with short service periods but reiterated LPPSA’s commitment to assisting borrowers in obtaining financing facilities.
Regarding potential new products, Mohd Farid mentioned that while LPPSA is considering the ‘rent-to-own’ concept, there is no urgent need to introduce it currently. The agency’s focus remains on ensuring civil servants can own homes at an affordable rate.
Mohd Farid also highlighted LPPSA’s ESG focus on the social element, specifically access to civil servant housing, rather than prioritizing green financing or new urban projects. He mentioned ongoing studies in collaboration with the Ministry of Housing and Local Government towards greener development.
Since Mohd Farid became CEO in 2020, LPPSA has embraced digital innovations, such as the e-Counter, to enhance communication and transaction processes. The use of digital channels has increased significantly, reflecting the agency’s commitment to improving services for civil servants.
Mohd Farid concluded by affirming LPPSA’s dedication to providing reliable housing financing facilities for civil servants, ensuring these facilities remain strong and relevant for future generations.