KUALA LUMPUR (Aug 10): Ringgit-denominated bond offerings in Malaysia are likely to hit the highest in five years in 2017, fuelled by financing needs of infrastructure projects, the chief executive of CIMB Investment Bank said.
Bond offerings in ringgit — including sukuk Islamic bonds — are expected to rise to a range of 80 billion ringgit to 90 billion ringgit (US$18.64 billion to US$20.97 billion) this year, from 77.5 billion ringgit last year, said CIMB Investment Bank Chief Executive Kong Sooi Lin.
That would be the highest since 2012, when ringgit bond offerings hit 116.8 billion ringgit, and the second highest in at least ten years.
"We think the bond market will be robust... There is a lot more infrastructure projects that are coming on stream in Malaysia," Kong told Reuters in an interview on Wednesday.
Infrastructure spending in Malaysia has increased over the last year, as Prime Minister Najib Razak aims to build momentum and boost the economy ahead of a general election that he has to call by mid-2018.
On Wednesday, China and Malaysia broke ground on a US$13 billion rail project linking peninsular Malaysia's east and west, the largest such project in the country and a major part of Beijing's Belt and Road infrastructure push.
The project would be financed with an 85— loan from China Exim Bank and the balance through a sukuk programme managed by local investment banks.
Kong said CIMB would be interested in participating in that.
A high-speed rail project connecting Malaysia and Singapore, set to be operational by 2026, will also boost bond issues, Kong said.
Kong, who was appointed as CIMB Investment Bank CEO in March 2016, said Malaysia's capital markets have been gaining momentum this year, after a soft 2016, and that a few more IPOs can be expected in the second half.
Poor market conditions, weak oil prices and a volatile ringgit have been a deterrent for IPOs in recent years, but the Malaysian market has seen a revival of sorts in 2017.
Lotte Chemical Titan Holding Bhd raised over US$850 million in Malaysia's biggest IPO in five years last month.
Other IPOs reportedly in the pipeline include fast food operator QSR Brands, which is looking to raise about US$500 million, and Edra Energy, which is targeting US$500 million to US$1 billion.
(US$1 = 4.2920 ringgit)