Syarikat Bekalan Air Selangor (Syabas) will sell RM3.2 billion (US$850 million) of Islamic bonds, the largest bond issue in Malaysia this year, to repay existing debt and for working capital, a report said Tuesday.

The proceeds would fund capital expenditure for seven years beginning 2005, Rozali Ismail, Syabas executive chairman was quoted as saying by Business Times newspaper.

Syabas is involved in the distribution of treated water to consumers living in Selangor and the Federal Territories of Kuala Lumpur and Putrajaya.

Its parent company, Puncak Niaga Holding, has said previously that Syabas would spend RM11.7 billion over 30 years to upgrade part the water supply system.