CIMB Group Holdings Bhd, the country's second largest banking group, has successfully undertaken and completed Malaysia's first public issue of Basel III-compliant Tier 2 Subordinated Debt.
In a statement yesterday, the company said its 99.99 per cent owned commercial banking unit CIMB Bank Bhd on September 13 2013 successfully completed its inaugural issuance of a RM750 million Basel III-compliant Tier 2 Subordinated Debt (sub debt)
It has a 10-year maturity period and callable at the end of year five and every subsequent semi-annual coupon payment date were priced at a coupon of 4.8 per cent per annum.
A myriad of investors comprising insurance companies (47 per cent, assets managers 20 per cent, government agencies 27 per cent and private banks (seven per cent participated in this landmark transaction.
"We are very pleased with the results of this deal in terms of both the size and price, especially given that this is Malaysia's first Basel III-compliant sub debt instrument and markets have been volatile," said CIMB Group chief executive officer Datuk Seri Nazir Razak.
"The transaction is a new milestone for the Malaysian capital market as a new capital-raising avenue is open and tested for others to tap in the future," added Nazir.
The sub debt, rated "AA1" by RAM Rating Services Bhd and "AA+" by Malaysian Rating Corporation Bhd, has been structured to qualify as a Tier 2 capital for the bank under Bank Negara Malaysia's capital adequacy guidelines, which require the sub debt to have loss absorption features at point of non-viability of the bank.
CIMB Investment Bank Bhd is the sole principal adviser, lead arranger and lead manager for the sub debt transaction.
The proceeds from the sub debt issuance will be used by the bank for its working capital and general banking purposes.