RAM Ratings sees uptick in bond issuances in 2Q 2010

The primary issuance market has been gaining momentum from the second quarter of 2010 due to confidence of a sustained economic recovery, despite a quiet start to the year.

RAM Ratings Services Berhad has observed more new private debt securities (PDS) issuances coming into play since March 2010. Total PDS issuance in the second quarter stood at RM17.8 billion, which was 77% higher compared to the previous quarter. In total, corporate bond issuance came up to about RM27.8 billion as at end-June 2010, albeit about 18% lower compared to the first half of 2009.

The pick-up in bond market activity for the second quarter was supported by various factors including better-than-expected economic data and a rebound in private investment activities driven by the improved global economic environment. It was also supported by the government’s objectives to stimulate a higher level of industrial activity through further liberalisation reforms, stable interest rate environment coupled with benign inflationary pressures, and demand for yield product in a low interest rate environment.

Says its Chief Executive Officer, Liza Mohd Noor: “The rise in issuance, with more than 80% dedicated to new investments, showed a stronger drive amongst issuers to capitalise on the favourable funding conditions to lock in attractive rates.”

RAM Ratings had rated RM11.7 billion worth of new PDS programmes in the first six months of 2010 (1H 2010), translating into approximately an 87%-share of the total rated market (RM13.5 billion). Nonetheless, actual fresh PDS issuance in the rated market amounted to only RM5.5 billion – a 42.7% year-on-year drop.

Meanwhile, new sukuk issues came up to RM3 billion in 1H 2010, of which 73.8% (or RM2.2 billion) was rated by RAM Ratings; actual sukuk issuance in the rated market summed up to RM1.4 billion.

The composition of conventional bonds and sukuk of the newly RAM Ratings-rated PDS programmes is in the ratio of 80:20.

While the value of conventional bonds is boosted by AmBank (M) Berhad’s RM7 billion Senior Notes Issuance Programme (lead-managed by AmInvestment Bank Berhad), RAM Ratings’ portfolio of new sukuk issues is driven by National Bank of Abu Dhabi PJSC’s RM1.5 billion Sukuk Murabahah under its Senior Unsecured Islamic/Conventional Medium-Term Notes Programme of up to RM3 billion (joint lead-managed by The Royal Bank of Scotland Berhad, HSBC Bank Malaysia Berhad, and Maybank Investment Bank Berhad).

Quick take on overall rated debt market

Source: RAM Ratings / FAST

AmInvestment Bank Berhad clinched the top spot in the RAM Lead Managers’ League Table for 1H 2010 in terms of programme value; Maybank Investment Bank Berhad (Maybank IB) came in second ahead of HSBC Bank Malaysia Berhad. Maybank IB also gained pole position in the RAM Lead Managers’ League Table for Sukuk Issues for 1H 2010, with a programme value of RM630 million and three issues under its belt.

RAM Lead Managers’ League Table for the period ended 30 June 2010

– by programme value

RAM Lead Managers’ League Table for the period ended 30 June 2010

– by number of issues

RAM Lead Managers’ League Table for Sukuk Issues for the period ended

30 June 2010

– by programme value

RAM Lead Managers’ League Table for Sukuk Issues for the period ended

30 June 2010

– by number of issues