A watershed general election that ushered in a new government provided a challenging backdrop for the Malaysian ringgit market, but CIMB Investment Bank sailed calmly through the choppy waters and helped maintain confidence in the bond market.
“CIMB always generates confidence for investors as they bring both capability and professionalism to the deals they show us,” said a fund manager at a leading domestic institution.
Indeed, just over a week after Malaysian bonds tumbled in the morning following the May 9 elections that saw the Pakatan Harapan coalition unseat a government that had held power for more than six decades, CIMB brought Cagamas to the market in a major test of confidence in government-linked issuers. Cagamas, was the perfect candidate to undergo the stress test and reopen the market, given its non-political stance and quasi-sovereign status.
Demand was strong for the national mortgage agency’s five-year 4.5% sukuk on May 17, allowing it to increase the size to M$1.5bn (then US$362m) in a strong demonstration that business was back to normal. That injected much-needed confidence in the corporate bond market, paving the way for a number of corporate issuers to follow, including Pengurusan Air’s M$2bn government-guaranteed bond priced on May 24.
CIMB’s ability to manage tricky deals during the period under review was also reflected in UMW Holding’s perpetual non-call 10 Islamic note in April. UMW’s key goal was to refinance the bulk of its debt and to protect its AA2 corporate rating from RAM. CIMB had to manage investors’ credit concerns over UMW’s oil and gas business and uncertainties over an acquisition announced midway during pre-marketing. Investors were won over, putting in a M$2bn order book for a M$1.1bn deal.
The Malaysian bank continued to hone its services to the debt capital markets during the review period, providing the full range of products from Islamic finance advisory to structured finance. CIMB’s structuring skills came in handy when it was tapped as sole principal adviser, sole lead arranger and sole financial adviser on Edra Energy’s M$5.085bn multi-tranche Islamic project bond, spread across 33 tranches of four to 20 years.
Priced on December 28 at yields of 5.61%–6.71%, Edra’s was the largest greenfield non-recourse project bond priced in 2017 and the largest Islamic issue for that year.
Issuers were also quick to praise the bank. One frequent borrower noted that CIMB’s value-added resources and expertise allowed it to execute deals at terms that balanced its own strategic goals and investors’ requirements.
The ability to connect issuers and investors was especially important in a year full of surprises, and stands CIMB in good stead for the future.