(Bloomberg) -- Malaysia became the first country to sell a dollar Sukuk linked to sustainable activities, adding to a growing number of issuers turning to debt financing for environmental and social projects.The Southeast Asian country priced $800 million of 10-year sustainability Islamic finance notes on Wednesday, Malaysia’s finance ministry said. The deal also included a $500 million 30-year tranche. The offering was oversubscribed by 6.4 times.Sustainable debt issuance rose 29% last year to a record $732 billion, according to figures from BloombergNEF. Indonesia sold green debt that complies with religious principles in 2018, making it the first country in the world to issue such securities, according to a United Nations Development Programme report.“Demand for ESG or sustainability-linked bonds continues to gain traction while there is still a limited supply” of such issuance from Southeast Asia, said Winson Phoon, head of fixed-income research at Maybank Kim Eng Securities in Singapore. “Adding the sustainability label helps widen further the investor base.”Spreads on both parts of the deal tightened during marketing, and the sustainability Sukuk sold at 50 basis points over Treasuries compared with initial price guidance of around 90 basis points. The deal resulted in the lowest-ever yield and spread for a U.S.-dollar Sukuk issuance by Malaysia, the finance ministry said.Malaysia is an infrequent issuer in overseas bond markets, last selling dollar debt in 2016. Its existing U.S. currency notes have a longer duration than Asian credit more broadly, which made them vulnerable to a selloff last quarter as yields spiked. They’ve since recouped some losses as interest rates retreated.Like governments around the globe, Malaysia has been tackling the impact of the pandemic, and Prime Minister Muhyiddin Yassin unveiled a 20 billion ringgit ($4.9 billion) stimulus package last month that included discounts on power bills, tax breaks and cash aid to the poor.Malaysia’s gross domestic product may expand 6% to 7.5% in 2021, its central bank said last month. That’s potentially slower than its earlier projection of 6.5%-7.5% growth, but still ahead of many of its neighbors.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.