This article first appeared in The Edge Financial Daily on November 3, 2017

KUALA LUMPUR: Hong Leong Financial Group Bhd (HLFG) is undertaking a RM25 billion multi-currency perpetual notes (PN) programme and a RM3 billion commercial papers (CP) programme.

The two programmes will, however, have a combined limit of RM25 billion.

Hong Leong Investment Bank Bhd lodged the programmes with the Securities Commission Malaysia (SC), HLFG said in a filing with Bursa Malaysia yesterday.

The PN programme consists of the issuance of senior notes, Tier 2 subordinated notes and additional Tier 1 capital securities. It has been assigned an AA1 rating for issuances of Senior Notes, AA2 rating for issuances of Subordinated Notes and A1 for issuances of Capital Securities, by RAM Rating Services Bhd.

The CP Programme, meanwhile, has been assigned a P1 rating by RAM.

HLFG said the Subordinated Notes are intended to qualify as the group’s Tier 2 capital pursuant to the Capital Adequacy Framework issued by Bank Negara Malaysia (BNM) on Aug 4. The Capital Securities, meanwhile, are intended to qualify as Additional Tier 1 capital.

Meanwhile, Hong Leong Investment Bank also lodged with the SC — on behalf of Hong Leong Bank Bhd (HLBB) — a multi-currency Additional Tier 1 capital securities programme (AT1 Programme) for the issuance of Additional Tier 1 capital securities of up to RM10 billion.

The bank said the AT1 Programme has been assigned an A1 rating by RAM.

It added that the capital securities issued under the programme are intended to qualify as Additional Tier 1 capital for the group.

Both HLFG and HLBB said that the proceeds from their programmes will used for on-lending to, and investment in, their subsidiaries. They will also be used for working capital, general investment and banking, and other corporate purposes. If required, the money will also be used for refinancing of any existing financing obligations.

HLFG’s share price gained four sen or 0.24% to RM16.74 yesterday, valuing the group at RM19.17 billion. Year to date (YTD), the counter has gained 15.13%. HLBB also rose four sen or 0.25% to RM15.98, giving it a market capitalisation of RM32.69 billion. YTD, the counter has appreciated 20.15%.