1Malaysia Development Bhd (1MDB), a sovereign wealth fund, is considering selling RM1.5 billion (US$461.96 million) of Islamic bonds to relocate air force units from a base sitting on prime land in the capital, Bloomberg reported today.

1MDB had earlier announced it would build a residential and commercial development, dubbed Bandar Malaysia, on the air base in order to complement plans to build financial district in the city.

1MBD had already awarded a RM2.1 billion contract to the Malaysian Armed Forces Fund Board (LTAT) in April to develop sites outside Kuala Lumpur to house the air force units that have been using the base.

Citing sources with knowledge of the plan, Bloomberg said 1MDB will not be hiring Goldman Sachs to arrange the debt offering after coming under scrutiny for using the Wall Street bank as a sole arranger for past issues.

Goldman Sachs was the sole arranger for dollar bond sales totalling US$6.5 billion over the past two years to fund 1MBD’s purchases of power plants in Malaysia, South Asia and the Middle East. This accounted for more than half of nearly US$12 billion bonds that 1MBD has issued over the past four years.

1MDB officials declined to comment on the report.

- Reuters