Malaysia's sixth largest lender, Eon Bank Berhad has mandated ING for a $150 million issue that is expected to be launched next week. The deal is slated to be a lower tier 2 offering with a 10 non-call five structure.
ING's position as lead manager is hardly a surprise given that the Dutch bank advised Eon on its back door listing on the KLSE in 2001.
Roadshows are expected to incorporate both Asia and Europe. International ratings have yet to be assigned, but the bank's parent Eon Capital already has an A2 rating from Rating Agency Malaysia (RAM). Other Malaysian banks that have issued international subordinated debt such as Maybank and RHB have respective local ratings of AAA and AA2 from the local agency.
At Asia's close yesterday, Maybank's 6.125% 2007 issue was trading at 3.88% to yield 196bp over two-year Treasuries or 77bp over Libor. RHB's 6.625% January 2008 deal wasquoted at 4.98% to yield 164bp over five-year Treasuries or 161bp over Libor. Bumiputra Commerce Bank, which has a 5.125% October 2008 deal outstanding, was likewise trading at 164bp over.
One of the reasons why Eon hopes to bolster its capital is because it has been one of the most aggressive banks in provisioning and reducing NPL's. From 4.9% at the end of 2002, net NPLs were down to 3.65% as of September 2003 when the bank last reported results. It also managed to increase pre-tax profits 28.2% quarter-on-quarter to M$132.9 million.
As of December 2002, the bank reported an overall capital ratio of 11.8%.
