Singapore Maybank hopes to get $500m from Sing-dollar bond issue
By SIOW LI SEN
(SINGAPORE) Maybank is the latest to offer high-interest-bearing notes to interest-starved investors. It is also the Malaysian bank’s first Singapore-dollar bond issue - and further proof that the local market has become attractive for foreign issuers.
Maybank expects to raise at least $500 million from its maiden Sing-dollar issue launched yesterday. The indicative interest rate for the securities is 5.9-6.1 per cent, bankers said.
‘Current volatile equity market conditions, coupled with low deposit rates, have resulted in investors seeking alternatives,’ said Tan Lay Hoon, OCBC Bank’s head of capital markets, group investment banking.
‘Accordingly, Tier 1 capital instruments (preference shares or capital securities) issued by Asian banks that have nominal exposure to the US sub-prime crisis have received overwhelming interest,’ Ms Tan said.
Examples of such instruments include OCBC’s Class B perpetual preference shares and DBS Bank’s innovative Tier 1 capital.
‘Investors have become familiar with these instruments and are prepared to invest for higher yield albeit at higher risk,’ Ms Tan said.
Aimed at wealthy and institutional investors, Maybank’s notes are being sold through the corporate and private bank channels of DBS Group Holdings and OCBC Bank. The minimum investment is $250,000. There are many similar features to DBS’s preference shares sold in May, including a step-up clause which effectively makes the issue a 10-year security.
According to a term sheet seen by BT, the notes will form part of Maybank’s innovative Tier 1 capital and the proceeds will be used for working capital and to strengthen its capital base.
Maybank spokeswoman Priscilla Loke said the exercise is aimed at maintaining Maybank’s capital ratios as it pursues acquisitions.
Maybank has been on an expansion drive this year, though it has run into wall in trying to buy a controlling stake in Bank Internasional Indonesia (BII).
Bank Negara yesterday revoked its approval for Maybank’s US$2.7 billion acquisition of BII as a result of recent changes in regulations in Indonesia.
In March, Maybank bought 15 per cent of Vietnam’s An Binh Bank for US$135 million. And in May it paid US$680 million for 15 per cent of Pakistan’s MCB Bank.
Separately, OCBC said yesterday its $50 million issue of 500,000 preference shares, sold through ATMs, was subscribed an overwhelming 11 times. In total 11,010 applications were received for 5.5 million preference shares amounting to $550 million, but only 2,021 were successful after balloting.
For those who applied for the minimum 200 shares, the balloting ratio was 15 out of 99 with 910 successful applicants, OCBC said.
Successful applicants who applied for higher number of shares received only a portion. Of the 31 who applied for 10,000 shares or more, the allotment was 1,000 shares.
Source : Business Times - 30 July 2008
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