PETALING JAYA: The capital market is expected to remain robust for the remainder of the year, fuelled by financing from government-led projects and fund-raising activities amid headwinds.
Maybank Investment Bank CEO Fad’l Mohamed told StarBiz the debt capital market is on track to achieve the projected RM110bil mark by year-end.
Last year, the debt capital market stood at RM104bil.
“As at Aug 31, 2021, it was at RM73.8bil and judging by this figure, the market is on track to achieve the RM110bil mark. Sector focus continues to be infrastructure financing, especially from government-led projects.
“We also see an increase in fundraising activities across financial institutions like commercial banks, non-banks and development financial institutions.”
He said this is in line with the pivotal role that the financial industry will play in rebuilding the economy and supporting the recovery of economic activities.
“At the same time, the market also saw several debut issuers from the financial industry tapping the capital markets to diversify their funding sources, in anticipation of higher volume of activities,” he said.
For 2022, Fad’l is forecasting a total bond issuance volume of RM120bil to RM130bil, driven by refinancing in addition to fresh funding requirements by companies on the back of an anticipated economic recovery.
He noted that corporates would also continue to look for opportunistic funding to capitalise on the still relatively low interest-rate environment before rates start to move up again as the economy gradually opens owing to the vaccination progress.
Maybank HQ in Kuala Lumpur
Block trades were the most active equity capital market segment in 2020. He expects it to continue picking up in the second half of the year as the market prices in a more sustained recovery from the Covid-19 pandemic.
“We have seen early evidence of this with MR D.I.Y. Group (M) Bhd’s RM846.4mil secondary placement in August, which was well received by both new and existing shareholders, with the top 10 long-only investors accounting for more than 80% of the final allocations of shares.”
Long-only refers to buying securities and holding them for the long term to capture the anticipated appreciation.
As investment picks up steam and the capital market remains robust, Maybank Investment Bank is strategising to strengthen its position in the market.
“As an investment bank, our strength lies in our people. The trust that clients place in us, our ability to deliver innovative ideas in response to the market environment – is primarily attributable to the strong teamwork and talent that we have.
“It is also important that we are able to execute while managing risks under uncertain conditions, from underwriting to market risks. We will continue to strengthen this area to ensure that we contribute to a resilient and robust capital market.
“In line with Maybank Group’s five-year plan, we have introduced an environmental, social and governance (ESG) infusion in our investment banking’s five-year plan,” he said.
For investment banking and advisory, he said the bank’s focus continues to be towards mobilising renewables financing and supporting ESG transition efforts.
Fad’l said this is also aligned with the Securities Commission’s recently released third Capital Market Masterplan, which includes proposals to mobilise capital to sustainable and responsible businesses via transition financing and widening funding options for companies embarking on net-zero commitments.
There has been strong demand from investors for ESG-linked products. Last month, SME Bank raised RM500mil in its maiden sustainability sukuk issuance, which is part of its RM3bil Sukuk Wakalah programme.
Maybank Investment Bank was joint lead manager for the deal, which is also the first sustainability sukuk by a development financial institution in Malaysia.
Last year also saw the bank advising and arranging Sime Darby Property Bhd’s RM800mil sukuk with a RM150mil SRI tranche, as well as the government’s RM666mil Sukuk Prihatin in which Maybank acted as the primary distribution bank.
Fad’l said Budget 2022 is anticipated to continue providing the country with an environment which is accommodative and attractive for sustainable finance.
Among the other notable deals which Maybank Investment Bank undertook were Petronas Capital Ltd’s US$3bil (RM12.6bil) Global Medium-Term Notes (GMTN) in April 2021 and US$6bil (RM25.1bil) GMTN in April 2020.
It also undertook MISC Bhd-KLCC Stapled Securities RM3bil concurrent secondary placements – the largest ever combined block trades and largest ever transportation and real estate investment trust follow-on offering in the country.