Thursday, Feb 08, 2007
KUALA LUMPUR (Dow Jones)--Nucleus Avenue (Malaysia) Bhd. is planning a massive MYR7.9 billion Islamic debt program, including the country's first-ever Shariah-compliant hybrid debt issue, fund managers familiar with the deal said Thursday.
The company, a unit of diversified MMC Corp., plans an eight-tranche MYR5.6 billion six- to 18-year program, a MYR1.7 billion 50-year hybrid bond callable in 10 years, and a MYR600 million commercial note cum medium-term note program, the fund managers said on condition of anonymity.
"They are indicating 5.60% to 6.80% for the six- to 18-year bond. We have to build the yield curve ourselves for now," said one fund manager.
The MYR5.6 billion in MTNs are split into tranches of MYR700 million each with tenors of six years, seven years, eight years, nine years, 10 years, 12 years, 15 years and 18 years, fund managers said.
A second fund manager said more details on pricing will be available later Thursday or Friday.
Indicative pricing for the 50-year hybrid bond, so-called because of some equity-like features of the issue, is about 8% to 9% in yield terms, said the first fund manager.
"It's not terribly attractive. The yield is too low for a deeply subordinated bond," he said.
In addition, missed profit payments on the hybrid bond "aren't deemed an event of default," he said.
CIMB Investment Bank is the lead-arranger of the Nucleus Avenue debt program.
The program follows MMC's MYR9.3 billion purchase of the remaining shares power producer unit, Malakoff, bringing its stake to 100%.
Later Thursday, Rating Agency Malaysia - one of the country's two domestic bond rating agencies - assigned a preliminary AA3 rating to Nucleus Avenue's MYR5.6 billion medium-term notes program and a A2 rating to the hybrid bond. It also gave a preliminary AA3/P1 rating to the company's MYR600 million CP/MTN program.
Proceeds from the MYR5.6 billion medium-term notes program and the MYR1.7 billion hybrid bond "will be utilized to partially meet Malakoff's MYR9.3 billion price tag, as well as to retire its existing MYR1.9 billion of debt," said RAM in a statement.
Nucleus Avenue's debt program is subject to formal approval from Malakoff bondholders at a meeting March 6, fund managers said.
-By Carolyn Lim, Dow Jones Newswires; 603-2692-5254; carolyn.lim@dowjones.com
-Edited by Michael Kitchen
Copyright (c) 2007 Dow Jones & Company, Inc.
(END) Dow Jones Newswires
08-02-07 0454GMT
