CIMB Investment Bank stood firm in a shaky political and economic environment in 2020, keeping the ringgit market open for business with a series of smart and innovative financings.
The bank dominated the league tables during the IFR awards period with a 30% share of the Malaysian ringgit bond market, underwriting M$30.4bn (US$7.5bn) of new issues, according to Refinitiv data.
The challenges arrived early in 2020, starting with political turmoil in February. The incumbent Pakatan Harapan coalition government, led to victory by Mahathir Mohamad at the 2018 general elections, was replaced with a coalition led by Muhyiddin Yassin and his UMNO partners.
The abrupt change in leadership was immediately followed by a lockdown in mid-March to limit the spread of the coronavirus, effectively shutting down large parts of the economy.
Despite these uncertainties, CIMB was able to bring complex and important deals to the market, helping issuers weather the storm and meeting investors’ demand for quality assets.
“For each bond we bring to the market, we are committed to ensuring that the issuer gets a transaction with the best benefits,” said Nor Masliza Sulaiman, senior managing director and head of capital markets.
Top Glove’s M$1.3bn perpetual non-call five Islamic bond was one such deal. In February, with demand spiking as the coronavirus began to go global, the rubber glove maker needed funds to expand but wanted to manage its gearing.
CIMB moved quickly to structure a subordinated sukuk that took advantage of surging global interest in Top Glove’s core business. Orders outstripped the issuer’s expectations, rising to over M$10bn before revised guidance whittled it to a final book of M$7bn, and the deal priced at 3.95% – the lowest yield or profit rate for any ringgit-denominated perpetual outside the banking sector.
CIMB also brought a rare project financing to the market, handling a M$1.7bn multi-tranche sukuk for first-time issuer Pengerang LNG 2. As well as the challenge of educating investors on the new credit and its regassification business via virtual roadshows, the bank faced a tight timeline to close the deal, pricing just one month after establishing the programme.
The result was a cracking book of over M$5.14bn with pricing tightening 15bp–23bp from initial guidance across 20 tranches.
Another innovative offering was the M$665m multi-tranche asset-backed bond for Starbright Capital in December 2019, Malaysia’s first securitisation of water receivables.
The deal allowed infrastructure group Taliworks to monetise revenues from its Kuala Lumpur water treatment plant and introduced investors to the credentials of Air Selangor after a restructuring of the water sector. The nine tranches, matching annual payment obligations, also created a benchmark yield curve for subsequent ABS from the utilities sector.
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