CIMB launches, prices Reg S only US$1 billion dual tranche notes issuance

KUALA LUMPUR: CIMB Bank Bhd (CIMB) successfully launched and priced a Reg S only US$1 billion dual tranche issuance under its US$5 billion Euro Medium Term Note Programme.

The issuance consisted of US$500 million three-year floating rate notes (FRN) and US$500 million five-year fixed rate notes (FXD). This dual tranche issuance is the largest US dollar offering in the Reg S format by an Asean financial institution since 2010, and also the first ever dual tranche FRN/FXD issuance by a Malaysian financial institution, according to Bloomberg.

The three-year FRN were priced at a spread of 80 bps over the US dollar three-month LIBOR (3M$L). The five-year FXD were priced at a spread of 115 basis points over the five-year US Treasury (UST5), equivalent to a yield of 3.263 per cent per annum. The notes would mature on March 15, 2020 and March 15, 2022 respectively.

Expected to be rated A3 (stable) by Moody's Investors Services, the notes were successfully priced through an intraday book building process.

The offering was met with demand from a wide array of investors, allowing a tightening of 25bps from initial price guidance across both tranches. The total combined order book size across both tranches at final guidance was over US$1.7 billion, with participation of 62 accounts for the FXD and 68 accounts for the FRN.

For the three-year notes, Asian investors accounted for 89 per cent of the allocation with the balance of 11 per cent to European accounts. Banks took up 47 per cent, fund managers 34 per cent, insurance 14 per cent and the remaining five per cent was taken up by corporates and others.

For the five-year notes, Asian investors accounted for 92 per cent of the allocation with the balance of eight per cent to European accounts. Banks took up 49 per cent, fund managers 32 per cent, insurance 17 per cent and the remaining two per cent was subscribed by corporates and others.

“We are very pleased with the outcome of this landmark floating rate note and fixed rate note combo transaction which also marked CIMB's return to the debt capital markets since the last USD350 million benchmark issuance in 2012,” said CIMB Group Treasury & Markets head Chu Kok Wei.

The notes will be listed on Bursa Malaysia Securities Berhad (Exempt Regime) and Singapore Exchange Securities Trading Limited.