Tuesday, June 09, 2009

Public Bank selling its debts?

By The Star

Public Bank Bhd (PBB) group has made the first issuance of RM1.2bil in stapled securities under its RM5bil capital raising programme.

The RM5bil non-innovative tier-1 stapled securities programme was approved by Bank Negara on March 16 and the Securities Commission on May 4.

The programme proposes the issuance of non-cumulative perpetual capital securities of up to RM5bil in nominal value to be issued by PBB which are stapled to an equivalent in nominal value of subordinated notes to be issued by a unit of PBB.

The group told Bursa Malaysia yesterday the subordinated notes would be issued by unit PBFIN Bhd.

The capital securities portion of the issuance will qualify as tier-1 capital of PBB and the PBB group under Bank Negara capital adequacy regulations.

The tenure of the capital securities is perpetual while the subordinated notes have a maturity of 50 years due on June 5, 2059 and the first optional redemption date of June 5, 2019.

The distribution rate and the interest rate payable for this issuance of capital securities and the subordinated notes are both at 7.5% per annum, payable semi-annually.

PBB said the stapled securities are issued at par. The proceeds from the subordinated notes will be used by PBFIN to on-lend to PBB.

The placement exercise, with an initial launch size of RM1bil, had been upsized to RM1.2bil due to increased investor demand, said PBB.

Investors that participated in the offering included insurance companies, asset management companies, private bankers, government agencies and financial institutions, it said.

* Is this wat we call the money market?