Malaysia's first in local currency by an offshore bank
CIMB Thai Bank, a subsidiary of CIMB Bank, announced that it had successfully completed the issuance of 400 million ringgit in Basel III-compliant Tier 2 subordinated debt.
This sub-debt issuance by CIMB Thai, issued out of a 2-billion-ringgit Tier 2 subordinated debt programme, marks Malaysia’s first ringgit-denominated Basel III subordinated debt issuance by an offshore bank.
The 400-million-ringgit sub-debt, rated “AA3” by Malaysia’s RAM Rating Services, has a maturity of 10 years and is callable at the end of the fifth year and every subsequent semi-annual coupon payment date thereafter. It will be recognised as Tier 2 capital for CIMB Thai under the relevant capital guidelines by the Bank of Thailand.
The sub-debt was priced at a yield to maturity of 5.60 per cent per annum, which is equivalent to approximately six-month Libor and 230 basis points after swapping from ringgit to US dollars.
Many investors comprising insurance companies (25 per cent), assets managers (39 per cent), private banking accounts (33 per cent) and banks (3 per cent) participated in this transaction.
“Despite this being the first Basel III-compliant sub-debt issuance in the Malaysian market by a foreign bank amid the challenging market backdrop, we are very pleased with the results of the size and price that we achieved for this transaction,” said Subhak Siwaraksa, president and chief executive officer of CIMB Thai.
“This successful transaction is also a testimonial to the depth of the [ringgit] bond markets, and also evidence of the confidence that investors have in CIMB Thai and Thailand, as well as the ability of CIMB to explain to Malaysian investors the current political situation in Thailand.”
CIMB Investment Bank acted as the sole principal adviser, lead arranger and lead manager for this transaction. Proceeds from the sub-debt issuance will be used by CIMB Thai for its working capital and general banking purposes.