Bangkok--8 Jul--CIMB Thai Bank
CIMB Thai Bank Public Company Limited (CIMB Thai), a 93.7% owned subsidiary of CIMB Bank Berhad of CIMB Group Holdings Berhad, announced that it has on 7 July 2014 successfully completed the issuance of RM400 million Basel III-compliant Tier-2 Subordinated Debt (Sub Debt).
This Sub Debt issuance by CIMB Thai, issued out of a RM2.0 Billion Tier-2 Subordinated Debt Programme, represents a landmark transaction in the Malaysian Ringgit (MYR) bond market marking it as Malaysia’s first MYR denominated Basel III subordinated debt issuance by an offshore bank.
The RM400 million Sub Debt, rated AA3 by the RAM Rating Services Malaysia, has a maturity of 10 years and is callable at the end of the fifth year and every subsequent semiannual coupon payment dates thereafter. It will be recognized 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 annum, which is equivalent to approximately 6-month Libor and 230 basis points after swapping from MYR to USD.
A myriad investors comprising insurance companies (25%), assets managers (39%), private banking accounts (33%) and banks (3%) participated in this landmark transaction.
“Despite this being the first Basel III-compliant sub debt issuance in the Malaysia’s market by a foreign bank amidst the challenging market backdrop, we are very pleased with the results of the size and price that we achieved for this transaction,” said Khun Subhak Siwaraksa, President and Chief Executive Officer of CIMB Thai.
“This successful transaction is also a testimonial to the depth of the MYR bond markets, and also an evidence of the confidence that investors have in CIMB Thai and Thailand, as well as ability of CIMB to explain to Malaysian investors about the current political situation in Thailand”, added Khun Subhak.
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.