CIMB completes inaugural Basel III-compliant subordinated debt issuance

It was valued at RM750m.

CIMB Group Holdings Berhad announced that its 99.99% owned subsidiary, CIMB Bank Berhad (“the Bank”) has on 13 September 2013 successfully completed its inaugural issuance of a RM750 million Basel III-compliant Tier 2 Subordinated Debt (“Sub Debt”), which is also the country’s first public issue of Basel III-compliant Tier 2 Subordinated Debt.

The RM750 million Sub Debt, with a maturity of 10 years and callable at the end of year 5 and every subsequent semi-annual coupon payment dates thereafter, was priced at a coupon of 4.80% per annum. A myriad investors comprising insurance companies (47%), assets managers (20%), government agencies (27%) and private banks (7%) participated in this landmark transaction.

“We are very pleased with the results of this deal in terms of both size and price especially given that this is Malaysia's first Basel III-compliant sub debt instrument and markets have been volatile”, said Dato’ Sri Nazir Razak, Group Chief Executive, CIMB Group.

“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 Berhad and AA+ by Malaysian Rating Corporation Berhad respectively, has been structured to qualify as a Tier 2 capital for the Bank under the 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 Berhad is the sole Principal Adviser, Lead Arranger and Lead Manager for the Sub Debt transaction.

Proceeds from the Sub Debt issuance will be used by the Bank for its working capital and general banking purposes.