BML holds talks on $300m Sukuk issue amid dollar shortage

The Bank of Maldives (BML) has begun discussions with international investors on a proposed Sukuk issuance of up to $300 million, as the country faces constraints in US dollar liquidity.

In an interview with Bloomberg, BML’s Director of Financial Strategy and Planning, Abdulla Hassan, said the bank is engaging with fund managers in Asia, the Middle East and Europe to assess demand for a dollar-denominated instrument in international markets.

He said the issuance is being discussed with a sovereign guarantee. Bloomberg reported that Mashreq Bank is assisting in arranging investor meetings.

The move comes as the Maldives faces pressure on foreign currency inflows linked to developments affecting the tourism sector. Disruptions to travel routes through Middle Eastern hubs and higher fuel costs have affected visitor arrivals.

Marcus Yiu said travel disruptions and higher energy costs have slowed growth, reduced tourism receipts and increased import spending. He said these factors have affected the balance of payments and raised risks to foreign currency liquidity and reserves.

Hassan said the funds from the proposed Sukuk would support circulation of foreign currency in the economy, although they are not tied to a specific sector.

“This liquidity will benefit the whole economy. It is an indirect solution to the current challenges,” he said.

He also referred to infrastructure and tourism development projects, including expansion at Velana International Airport and plans for new resort islands, which require foreign currency financing.

The Moody’s analyst noted that the government faces constraints in accessing international markets due to the cost of borrowing.

The government has taken steps to manage foreign currency reserves following a decline in 2024. Last month, it used reserves to settle a $500 million Sukuk instead of refinancing the instrument. The payment has added pressure on foreign currency availability.