Today, Malaysian Rating Corporation Berhad published its 2015 lead managers’ league tables. Published annually, the league tables rank the lead managers by volume and number of lead-arranged MARC-rated issuances in any given year. The tables provide a meaningful measure of domestic corporate and project bond and sukuk issuance activity given that only issuances that have attained financial close are included. Recent years have seen more deals featuring two or more joint-lead arrangers emerge, in respect of which equal credit is given to each bank. 

For the fourth consecutive year, CIMB Investment Bank Berhad (CIMB) topped the issued value league table with RM23.96 billion of rated programmes/issuances. Maybank Investment Bank Berhad (MIBB) came in second with rated programmes/issuances of RM11.79 billion, followed closely by HSBC Bank Malaysia Berhad with RM10.00 billion. CIMB also retained its top position on the issue count league table followed by MIBB.

MARC rated two identical large size issuance programmes in 2015 of RM10.0 billion each: CIMB Group Holdings Berhad’s (CIMB Group) Basel III-compliant Tier 2 Subordinated Debt Programme and Malayan Banking Berhad’s (Maybank) Senior Medium-Term Notes. Jimah East Power Sdn Bhd's Sukuk Murabahah of RM8.98 billion was the single largest issuance in the private debt securities (PDS) market in 2015. The 2015 issued value league table underscores a trend towards larger ticket deals; however, at the same time, deal count has remained subdued.

In 2015, MARC assigned 10 ratings to corporate debt programmes worth RM36.6 billion (2014: 11 ratings; RM44.1 billion). This marks the second consecutive year of smaller number of rated issues and total rated volume. On a positive note, Islamic bond or sukuk programmes maintained their appeal to investors and continued to dominate MARC’s assigned ratings, accounting for approximately 60% of the total issued value and about 70% of the total number of ratings on issued amounts.

Factors behind the observed trend of smaller number of rated deals and total rated volume include an increase in unrated issuance and a cutback on borrowing from the capital markets by issuers. Total gross issuance of private debt securities amounted to RM85.0 billion in 2015 compared to RM85.9 billion in the preceding year on the back of marginally slower primary market issuance activity. The year 2016 is unlikely to top 2015 in terms of PDS issuance given the backdrop of slower economic expansion and increasing global financial market volatility.

For 2016, MARC expects new private debt securities issuances to be in the range of RM65 billion to RM75 billion, including unrated government-guaranteed papers and unrated private placements. During the first quarter of 2016, two MARC-rated sukuk programmes were offered to the market: Sime Darby Berhad’s RM3.0 billion Perpetual Subordinated Sukuk and Putrajaya Bina Sdn Bhd’s RM1.58 billion Sukuk Wakalah.

As in previous years, MARC expects drivers for PDS issuance activity in 2016 to be infrastructure funding and refinancing demand. The Malaysian bond and sukuk markets would remain an important funding source for domestic corporates and infrastructure project owners. On a related note, the current interest rate and policy environment continue to provide a supportive backdrop for new issuances. 

Commenting on the bond and sukuk markets’ apparent lack of appetite for issuances rated below “AA-”, MARC Chief Executive Officer Mohd Razlan Mohamed said: “MARC is confident that the absorptive capacity of the domestic bond and sukuk markets can be increased with issuances that carry some form of credit enhancement such as third-party partial credit guarantees in respect of which MARC has pioneered a rating methodology early this year.”

With the benefit of credit enhancements, the credit ratings of the bonds and sukuk can be improved to levels that are attractive to institutional investors. This will help ensure that a significant measure of corporate refinancing activity will be addressed by the domestic bond and sukuk markets, possibly reversing what seems to be a trend of increasing reliance on intermediated lending for corporate financing needs. This could also provide a welcome fillip to the domestic bond and sukuk markets whose growth is currently dependent on standalone or fully guaranteed high investment grade issuances.

Details of MARC’s 2015 League Tables are as follows:

LEAD MANAGERS’ LEAGUE TABLE FOR JANUARY-DECEMBER 2015
(by rated issued value in RM million)

LEAD MANAGERS’ LEAGUE TABLE FOR JANUARY-DECEMBER 2015
(by issue count)

Note:
Rated issued value credit is given to lead managers based on the programme-specific arrangements between lead arrangers for jointly-arranged programmes. Equal issue count credit is given to lead managers for jointly arranged programmes. 

Contact:
Yap Ngee Heong (Jack), +603-2082 2212/ ngeeheong@marc.com.my.