CIMB issues RM2bil of subordinated debt

CIMB announce at a press conference the2014 Financial Year-End results in Kuala Lumpur, Friday, February 27, 2015. RAJA FAISAL HISHAN/The Star.

KUALA LUMPUR: CIMB Bank has issued the third and biggest tranche, comprising RM2bil of Basel 3-compliant Tier 2 debt, under its RM10bil subordinated debt programme that was set up 2½ years ago.

CIMB Group Holdings Bhd said it (the parent company) had also issued on Wednesday RM2bil of Basel 3-compliant Tier 2 subordinated debt whose entire proceeds were used to subscribe to the debt newly issued by its 99.99% subsidiary.

According to the statement, the subsidiary’s debt bear similar terms. 

CIMB Group’s 10-year debt, noncallable for the first five years, has a 5.5% coupon rate per annum and has been rated AA by Malaysian Rating Corp Bhd. 

CIMB Bank will use the proceeds for working capital requirements, general banking and other corporate purposes and for refinancing the bank’s existing subordinated debt.

The CIMB Bank subordinated debt was part of its Tier 2 subordinated debt programme of RM10bil in nominal value established in mid-2013.

Based on Bursa announcements, there has been no issuance under the programme apart from the inaugural issuance of RM750mil sub debt in September 2013 and RM300mil sub debt via private placement the following month.

CIMB Bank had in May 2013 obtained the approval from Bank Negara to establish the debt issuance programme of up to RM10bil in nominal value and received the Securities Commission’s green light in June.

Its programme was rated AA1 by RAM Rating Services Bhd and AA+ by Malaysian Rating Corp.

CIMB shares rose 3 sen to close at RM4.50 on Wednesday.