Malaysia’s bond market enjoyed a record year, and banks needed first-rate execution skills to keep up. For its clear edge in distribution, its solid market read, and for daring to venture into untested waters with innovative products, CIMB is IFR Asia’s Malaysia Bond House of the Year.
Coming out on top in one of Asia’s most competitive bond markets is no mean feat, but CIMB used its deep corporate relationships to top the league tables, and flexed its distribution muscles to win over issuers and investors alike.
Nothing demonstrates the bank’s grasp of the local market better than a M$2.45bn two-tranche Islamic MTN issue for Malaysian telco Maxis in February.
Rated issues dominate the ringgit market, and investors are comfortable with them. Maxis provided a challenge, however, with an unrated bond structured as a public issue rather than a private placement.
As sole principal adviser, CIMB led the placement of the core M$1.95bn tranche, successfully convincing investors of the deal’s merits and, in so doing, opened a new asset class in the local debt markets. Unrated sukuk are typically not tradable, to qualify for stamp duty exemption, but CIMB turned that practice on its head by selling it as a public deal, and focussing investors’ attention on the structure. The deal brought in a diverse group of buyers, including government agencies, insurance companies and financial institutions.
Investors said CIMB’s clear and confident distribution strategy was a major factor in the deal’s success.
Indeed, the bank’s distribution platform gives its an edge over its competitors on many deals – testament to CIMB’s determination to build a full-fledged fixed-income syndicate team.
The bank revamped its debt platform during the year in a move to offer clients more integrated financial solutions. It has created a single debt platform through the merger of its debt capital markets, loan syndication and structured finance units. Within this unit, CIMB has also developed its credit-derivative capabilities.
The idea behind this is to serve clients that are increasingly doing business further afield – mirroring the bank’s own regional expansion. With its network of local units across South-East Asia, CIMB has also developed its local-currency capabilities outside of its home Malaysian market, helping it win lead roles on more cross-border deals.
This came into play in the S$1.8bn perpetual securities issue for Genting Singapore. As the client wanted to sell to a wider audience in Asia, CIMB was solely responsible for winning approval from the Malaysian Securities Commission to allow Genting to sell the Singapore-dollar perpetuals to institutional and high-net-worth investors in Malaysia. This was the first and only Sing-dollar bond sold in Malaysia on a primary basis.
“CIMB’s primary focus has always been in creating value for our clients,” said Lee Kok Kwan, CIMB Group’s deputy CEO, group treasury and investments.
“As we go into an era where ASEAN economies move forward and expect more cross-border transactions across the region, clients understand that they are able to capitalise on our platform and services and to be able to know that, when they come to CIMB for a funding solution, we don’t just present, but we are able to show them a range of options with the most opportunistic value,” Lee said.
Malaysia’s bond market enjoyed a record year, with M$96bn of issues printed during the review period. CIMB ended the 12 months with a dominant market share of 51.4%.
CIMB’s successes have not come at the price of prudence, and the bank has deliberately not been as aggressive as many of its rivals when it comes to bringing foreign issuers to the ringgit market.
CIMB plans to redouble its efforts to maintain its strategic position at the top of the league tables in 2013. Following the acquisition of a selection of RBS’s Asia Pacific investment banking assets, the bank is poised to make further inroads in Australia, Taiwan, Hong Kong and mainland China.
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