TRX City Sdn Bhd and its partner are trying to raise more than RM2.5 billion for a project at Tun Razak Exchange (TRX) but the response from local banks has been described as "lukewarm", according to a report by The Edge Markets.

Citing sources, the report said several banks have been approached to gauge their responses, but the type of instrument has yet to be decided.

UK banking giant HSBC and a few Singaporean banks are said to have shown interest, while local banks such as RHB, Malayan Banking Bhd and CIMB Bank Bhd were less enthusiastic.

The report said that the Finance Ministry is unhappy with the "cool response" from local banks.

"Some of (the local banks) said the property market, both commercial and residential, was still soft. Others were hesitant due to TRX's old parent, 1Malaysia Development Bhd (1MDB)," another source said.

The report noted that HSBC was already committed to the TRX project by having acquired a plot of land to build the bank's new country headquarters.

In 2010, Putrajaya sold a 70-acre piece of land, known at the time as Dataran Perdana, near Bulatan Pandan to 1MDB for RM230 million, or about RM75 per sq ft.

Delayed project?

At the time, 1MDB called the project the Kuala Lumpur International Finance District, modelled after London's Canary Wharf. It was later called the Tun Razak Exchange (TRX) after Prime Minister Najib Abdul Razak's father.

After 1MDB faced cash flow problems, the TRX project was transferred to Ministry of Finance Incorporated (MOF Inc) and operated under the name TRX City Sdn Bhd.

Subsequently, the 70 acres were carved up and sold to six companies, including Indonesia's Mulia Property Development Sdn Bhd, Affin Bank Bhd, Lembaga Tabung Haji, WCT and Australia's Lendlease.

Putrajaya has not named the sixth company involved, merely stating that it was owned by MOF Inc.

According to The Edge Markets, TRX City and its joint-venture partner Lendlease Corp Ltd are seeking the RM2.5 billion to develop a 17-acre parcel known as the "lifestyle quarter".

The funds are said to be a bridging loan to kick-start the project and that the intended duration of financing was only three years.

The report noted that TRX City had roped in Lendlease in June 2014 as a major investor, but there has been little progress with the "lifestyle quarter" project.