The company, rated triple-A by Rating Agency Malaysia, issued a M$500 million five-year note and a M$500 million 10-year note. The five-year tranche priced at 4.08% (flat to the five-year ringgit swap rate) and the 10-year tranche priced at 4.43% (10bp over the 10-year swap rate). In US dollar Libor terms, this works out to a spread of about 33bp and 41bp respectively. The deal closed with M$5.365 billion of orders, covering the book 13.4x over the initial issue of M$400 million.
Maxis and its bookrunners, HSBC and CIMB Investment Bank, set initial price guidance on Monday at a range of 410bp-420bp over swaps for the five-year, and 445bp-455bp for the 10-year bond. On Tuesday, the deal team tightened the guidance to 408bp-411bp and 443bp-446bp respectively, and the deal closed at the tight end on both tranches.
This compares favourably with the pricing of similar borrowers in the local bond market. Rantau Abang - also rated triple-A by Rating Agency Malaysia - has a four-year quoted bond with a bid-offer spread of 411bp-413bp, implying a new five-year bond of 415bp-416bp. Rantau Abang also enjoys the added benefit of a 20% risk weighting since it is owned by Khazanah Nasional, the investment holding arm of the Malaysian government. That makes it much cheaper for many investors to hold its paper compared to Maxis, which is 100% risk-weighted.
Further, Malaysia's central bank, Bank Negara, also publishes a range of average yields for Malaysian borrowers that quotes five-year triple-A bonds at an average yield of 4.213% and 10-year bonds at 4.716%.
Such success reflects the borrower's credit quality and the fact that investors had been waiting for Maxis to tap the local markets since 2004, when HSBC arranged the commercial paper programme that was used to issue the bonds.
Maxis will use the cash raised to fund domestic and international expansion, and to repay borrowings.
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