DEALS in the issuance of debt and new shares dipped in Malaysia this year from 2015 due to a softer market. Debt capital market issuances amounted to US$10.12bil from US$12.5bil last year and equity capital market deals fell to US$2.23bil from US$3.83bil in 2015.
But headlining the fund-raising exercises were the US$1.5bil raised through Malaysia Sukuk Global Bhd on April 20. According to a report, the offering was the Government’s fifth dollar-denominated global sukuk and was oversubscribed by 4.2 times. The other four global sukuk issuances were in 2002, 2010, 2011 and 2015.
The unique feature of the sukuk is that it comprises non-physical assets, a first for a sovereign sukuk.
The next largest debt issuance was the one by Sarawak Hidro Sdn Bhd, which raised US$1.37bil to refinance existing debt for the Bakun dam power plant, which is said to supply 50% of Sarawak’s power needs.
DanaInfra Nasional Bhd took the next two spots by raising money for the mass rapid transit (MRT) project in the Klang Valley. The first issue was for US$1.16bil completed on April 21 and the other was for US$1.08bil issued on Oct 12. The MRT project, then the single largest project announced, has just opened its first phase with trains running between the Semantan station and Sungai Buloh. The second part of the first phase running up to Kajang will be operational in July next year.
Coming in fifth position was a US$986.3mil issuance by Lembaga Pembiayaan Perumahan Sektor Awam, a statutory body established under the Public Sector Home Financing Board Act 2015. It said the sukuk was issued to finance the provision of housing loans to the civil servants and was oversubscribed by more than three times.
Next on the list is the US$911.7mil issuance by Lebuhraya DUKE Fasa 3 Sdn Bhd. The highway operator raised the money to part-finance the project, which has a project cost of RM5.05bil.
National Higher Education Fund Corp issued a bond for US$879.9mil on July 19. The agency, which provides education loans, has recently taken action against defaulters by blacklisting over 1.5 million borrowers.
In the next two spots were issuances by Danga Capital Bhd and TNB Global Ventures Capital Bhd, both issuing US$750mil bonds. The Danga Capital sukuk was completed on Feb 23 and was to refinance Penerbangan Malaysia Bhd’s US$1bil guaranteed notes that were maturing this year.
Khazanah Nasional Bhd, which owns Danga Capital, said the issuance capitalised on low US Treasury yields at that point and will save the Government 2.59% per annum against the current 5.625% coupon. The issuance will also reduce the Government’s contingent liability.
TNB Global Ventures Capital Bhd is a special-purpose vehicle by Tenaga Nasional Bhd (TNB).
Rounding up the top-10 list of the largest debt capital market deals was the issuance by Prasarana Malaysia Bhd worth US$732.7mil. The offer was to finance the construction of the Ampang and Kelana Jaya light rail transit line extensions and was oversubscribed by 2.6 times.
The 10 largest debt capital market issuances were much bigger than the equity capital market deals, which was led by a placement by Sime Darby Bhd on Oct 5. The placement was to address Sime Darby’s debt issue which has been a drag on the conglomerate ever since it acquired New Britain Palm Oil Ltd. The placement raised US$571.7mil. The shares were priced at RM7.45 a share and the company at that time said it was part of its deleveraging exercise that will reduce the debt-to-equity ratio to about 38%.
On Sept 8, Khazanah completed a placement of 1.5% of shares in TNB that raised US$289.1mil for the sovereign fund. Khazanah has been slowly diluting its stake in TNB over the years as its seeks to improve liquidity of TNB shares on Bursa Malaysia.
There was only one rights issue among the top-10 equity capital market deals for 2016 and that was by Malaysia Building Society Bhd. It raised US$257.8mil from the rights issue that improved its capital position and also saw the shareholding of its largest shareholder, the Employees Provident Fund, rising to 65.4% in the financier.
The next two largest deals on the list were by IHH Healthcare Bhd, which raised US$247.3mil on Sept 26 and US$203.5mil on May 31. The placement in May was by Khazanah when it sold a 1.6% stake in IHH, and the one in September was when Mitsui & Co Ltd disposed of about a 2% stake in the healthcare provider.
SapuraKencana Petroleum Bhd has the sixth-largest placement deal this year when it raised US$197.4mil on April 27. The money was raised to partially satisfy payment to Seadrill Ltd for the tender rigs it was purchasing.
Next on the list of equity capital market deals was the one by Eco World Development Group Bhd when it raised US$133.3mil on Oct 18 through a placement exercise. Money from the placement was to part-finance its subscription of Eco World International Bhd shares, which is headed for a listing on Bursa Malaysia.
Eighth on the list is a US$123.4mil placement of Telekom Malaysia Bhd (TM) shares on Dec 8. The placement of TM shares was done by Khazanah, which like its stake in TNB, was a long-standing plan by the fund to cut its shareholding of the largest companies it controls on Bursa Malaysia.
On the same day, MRCB-Quill Reit completed a placement to raise US$110.1mil to part-finance its acquisition of Menara Shell, a 33-storey office building in KL Sentral.
Rounding up the list of the Top 10 equity capital market deals was the one conducted by Yinson Holdings Bhd on Oct 26. The placement of Yinson shares on that day raised US$100.9mil for Datuk Yeow Kheng Chew, who was a former business partner of Tan Sri Mokhzani Mahathir when he sold almost his entire stake in Yinson.
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