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Thursday, 19 April 2018

Malaysia Bond House

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CIMB Investment Bank was at the forefront of a healthy pick-up in bond issuance in Malaysia in 2017, beating its rivals with a broad mix of business.

CIMB grabbed pole position for ringgit-denominated bond issuance in a tightly-fought race over IFR’s review period. As well as extending its enviable track record for infrastructure financings, it went above and beyond to introduce new products to the Malaysian market.

Mah Sing Group’s M$650m (US$158.3m) senior perpetual note in April stood out as an innovative solution. The property developer had a low gearing ratio but wanted equity treatment from a perpetual structure as it planned to embark on an expansion drive that would be debt-driven. While the company is not a new credit to the investor community, it had three negative factors against it – the high-risk nature of perpetual securities, a lack of rating, and a slowdown in its core markets.

As sole principal adviser and sole lead manager, CIMB presented a credit-enhancement solution that appealed to investors. Among other things, the bond benefited from security in the form of unencumbered properties, making the perpetual the first in Malaysia to be secured. CIMB worked simultaneously with the issuer and investors to draw up a structure that worked for both parties, and the deal attracted major institutional investors, with orders exceeding expectations at over M$900m. Real money accounts were well represented with 39% of the deal going to asset managers and 25% going to insurance companies.

Innovation was also a theme in a small but significant M$5m retail-targeted placement from Khazanah Nasional-owned Ihsan Sukuk. Khazanah wanted to play its part in developing the retail bond market and engage buyers looking for sustainable and responsible investment (SRI) opportunities, and chose to include a small retail tranche in its M$100m four-tranche SRI sukuk offering. CIMB pushed the boundaries as sole principal adviser and lead arranger as well as joint lead manager on the deal, the first SRI sukuk to include a retail tranche.

CIMB extended its dominance in the telecommunications and project finance sectors, underlining its first-class distribution capacity for infrastructure credit. In the power project finance market, it was sole financial adviser as well as joint lead manager and bookrunner for Southern Power Generation’s jumbo M$3.665bn 28-tranche sukuk in October. The deal pulled in a cracking M$16bn of orders, allowing the issuer to tighten pricing by 20bp–23bp from initial guidance, and exemplified CIMB’s electrifying year.

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