United Overseas Bank (Malaysia) (UOB Malaysia) has successfully priced their debut RM500 million ($106 million) Basel III-compliant Tier 2 subordinated Islamic medium term notes (Tier 2 Sukuk Wakalah).
On January 23, it became the first public Tier 2 Sukuk transaction in the Malaysian ringgit market, issued by a foreign owned bank.
William Chua, managing director, debt capital markets, investment banking, group wholesale banking, at CIMB told FinanceAsia: “More than 40 investors participated in the successful debut by UOB Malaysia in the sukuk market with the tightest ever spread for a RM Tier 2 transactions.”
CIMB was one of the joint lead managers for the transaction, alongside UOB for the transaction.
This transaction was timed to capture the window early in the year when the “market is conducive with ample liquidity”, according to a media release.
UOB Malaysia is rated AAA with a stable outlook by RAM, while the Tier 2 Sukuk Wakalah is rated AA1.
This deal was done on the back of an investors’ townhall held on January 10 with a reception of more than 72 participants from 38 institutions across the investing community.
The transaction was book-built with the deal size announced upfront to build strong demand momentum at the onset which accelerated the process of identifying the real interest and optimum pricing levels, the release said.
Demand from 42 investors enabled UOB Malaysia to close the book at 4.01%, the tightest end of the initial price guidance (IPG), with a final order book of RM1.7 billion registering 3.39 times cover.
The issuance had a strong distribution across a wide range of investors including insurance at 25%; asset management at 58%, private banks: 2%; banks at 11% and corporations at 4%.
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