Despite the distractions of a general election and US monetary policy, CIMB showed a consistent commitment to developing the Malaysian bond market.
New issue volumes fell 47% year on year to M$50.7bn (US$15.8bn) during IFR’s review period. Issuance skidded to a halt in March when early poll preparations sidelined investors. Shortly after the early May election was over, the US Fed wreaked havoc with global emerging markets on talk of plans to curb its monetary-easing programme.
Against such a backdrop, CIMB pushed the boundaries with a number of new features to service both investors and issuers.
“We’re one of the pioneers in the local market and have since continued to play our part in supporting new initiatives and developments aimed at helping the market to become more transparent and friendly,” said Lee Kok Kwan, deputy chief executive officer.
In a sign of its leadership, CIMB was intent on setting a benchmark in Basel III-compliant bank capital. Amid shaky markets, the bank launched intensive meetings with investors to educate them on the new loss-absorbing structure. CIMB itself completed the country’s first issue of Basel III Tier 2 securities in September, proving investors could become comfortable with the format.
The T2 bonds were priced to yield 4.8%, a premium of only 10bp–15bp over CIMB’s outstanding old-style paper on an implied yield curve. The offering confirmed that banks could meet regulatory requirements without paying fortunes to go from Basel II to Basel III.
Another achievement was preparing the base for Malaysia’s first exchange-traded bond and sukuk (ETBS), a security available to both institutional and retail investors through the stock market. Opening the debt markets to individual investors has been a long-term aim for Malaysian regulators.
The M$300m 10-year debut for DanaInfra Nasional was Malaysia’s first retail bond. As sole financial adviser, CIMB played a key role in getting the infrastructure and logistics in place for retail investors to trade and clear the security. That proved a huge challenge as the two bourses involved – the stock exchange and the over-the-counter exchange – had different platforms, but yet had to facilitate seamless ETBS trades.
CIMB also introduced new products to help clients. One of these was an electronic live bookbuilding programme that allowed issuers to follow and analyse investor demand as orders accumulated. The bank also created forward issuance arrangements, which allow borrowers to lock in current rates for long-term project finance projects. Kimanis Power used this feature on a M$300m sukuk last June to finance construction of a power plant.
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