PETALING JAYA: Malaysia’s capital market is expected to remain robust this year with companies looking to raise capital and expand their businesses as economic activities pick-up.
Maybank Investment Bank (Maybank IB) head of debt capital markets Sarina Dalik told StarBiz that a total of RM89.9bil corporate bonds are due to mature in 2022.
“We expect bond issuers to continue favouring the bond market due to the ample liquidity available and the relatively low interest rate environment. Infrastructure bond supply is expected to remain strong due to on-going investments in rail transport, water and renewable energy sectors.
“This may also include funding requirements from the National Digital Infrastructure Plan to provide wider coverage, better broadband quality, and preparing 5G infrastructure for the country.
“There might also be some corporates with loan maturities looking to tap the bond market for the first time due to the ample liquidity available and to lock-in lower long-term financing rates,” she added.
As for the equity capital markets (ECM), head of investment banking and advisory Kevin Davies said he expects the ECM to remain active for the year, as clients actively seek expansion opportunities in the equity market to raise capital.
He said the initial public offerings (IPOs) in the country raised a total of RM2.59bil in 2021, a 30% increase from 2020 and anticipates this momentum to continue as investors’ confidence remains strong, citing in Farm Fresh’s recent IPO which was oversubscribed.
“We have several IPOs in the pipeline from sectors such as technology, media and telecommunications, consumer and retail, real estate and lodging, as well as general industries that will come to the market in the next 12 to 24 months, should market conditions remain favourable,” he noted.
Maybank Investment Bank investment banking & advisory head Kevin DaviesOn the mergers and acquisitions and advisory front, he expects more opportunities arising from restructuring activities of government linked investment companies, private equity buy and sell side transactions and in-country consolidation.
He said this could be seen in recent transactions, such as exiting non-core activities to streamline core business and portfolio (e.g. Ancom Bhd taking over the assets and liabilities of Nylex Bhd) and raising capital competitively to fund business growth (e.g. Sunway healthcare selling 16% stake to Singapore’s GIC Pte Ltd).
Meanwhile, Maybank IB expects market conditions to improve in tandem with economic demands, and is optimistic that investment banking activities would remain robust for the rest of 2022 as economic activities are gradually returning to pre-pandemic levels.
The investment bank said while the country’s overall investment banking and advisory deal value declined by 49.6% from US$16.55bil (RM70bil) to US$8.33bil (RM35bil) year-on-year (y-o-y) for the first quarter of 2022, ECM activity increased slightly y-o-y by 4.1% from US$675.1mil (RM2.8bil) to US$703.9mil (RM3bil) for the period.
On another note, with sustainability being a strategic priority under Maybank’s M25 five-year plan, the investment banking arm is also building up its capabilities to meet the group’s sustainability commitments as well as market demand for green, social, sustainability and sustainability- linked instruments.
To this end, Sarina said, among others, Maybank IB has established a dedicated sustainable finance team in Oct 2021 to guide clients through the end-to-end process of sustainable financing.
The team would also help issuers select second opinion providers and external reviewers, and co- ordinate and liaise with these parties to obtain certifications, verifications and reviews, she said.
She noted that this initiative has further strengthened Maybank IB’s position, with the bank ranking the number one on Dealogic’s Debt Market & Loans league table for Malaysia as of year-to-date March 2022.
Davies stressed the importance of environmental, social and governance (ESG) adoption into Maybank IB’s operations.
“ESG is very much part of Maybank’s DNA, as part of our mission of humanising financial services. It means being accountable to our stakeholders, which include our employees and the community.
“In order to serve our clients well, we have to ensure the safety and well-being of our people, by providing an inclusive workplace and prioritising their development,” he added.