Thursday June 28, 2012
Exim bank said to be looking at launching RM1.6bil dollar bond
By DALJIT DHESI
KUALA LUMPUR: After successfully selling its inaugural US$500mil (RM1.6bil) 5.5-year dollar bonds which was oversubscribed by six times, Export-Import Bank of Malaysia Bhd (Exim Bank) is looking at launching a similar bond issue with at least the same value next year to support its targeted 20% year-on-year loan growth.
Its managing director and chief executive officer Datuk Adissadikin Ali said the second issue would be launched if the market conditions warranted it and met the bank's business needs.
“Bonds issuance is a good alternative for our funding needs. If we can address the issue of pricing (from external borrowings) and maturity tenure of our loans effectively via bonds, than we will fund through the bond way. Judging from the response of Exim Bank's inaugural debt issue and the good take up rate, we feel tapping the international capital market via bonds is a good alternative form of financing,'' he told StarBiz in an interview.
Adissadikin said plans entailed that the second issue would at least have a similar bond value of US$500mil. The first and the proposed second issues were part of the bank's US$1.5bil medium-term note programme.
He added the bond issue was aimed at raising capital for the bank's expansion and to meet its annual target growth of 20% for its loan book.
Exim Bank is targeting loan disbursements of between RM1.8bil and RM2bil this year and was confident of achieving the target as its loan disbursements has reached RM1.5bil in the first six months of this year.
The bond issue, he noted would also boost the profile and credibility of the bank on the world map. The inaugural bond issue was launched on June 7 despite the looming European sovereign debt crisis and the global economic uncertainty.
Although there were no Government guarantees for the issue, he said the issue was well received, backed by Exim Bank's turnaround initiatives.
The bond issue also achieved the lowest yield or coupon rate by any Malaysian entity for a five-year tenure and was the first ever foreign currency bond issue by a Malaysian development financial institution, he said, adding that it was only about 20 basis points higher than the Malaysian Government US dollar Bonds.
The bank returned to profitability with a net profit of RM176.3mil for the financial year ended Dec 31, 2011 after incurring a net loss of RM300mil a year earlier due to a combination of key initiatives implemented to improve business and operational effectiveness.
Adissadikin said the bank's new markets for its customers were mainly in Asia, noting that there was growing enquiries from Malaysian businesses planning to venture into other African countries (excluding North Africa) and Central Asia.
The bank is rated A3 (stable) by Moody's Investor Services and the equivalent A- (stable) by Fitch, which are similar to Malaysian sovereign ratings.