Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Most companies choose to issue equity rather than bonds to raise funds
overseas. Briefly discuss FOUR (4) factors why they prefer to do so.
Transcribed Image Text:Malayan Banking Bhd (Maybank) has issued US$28 million (about RM115.81 million)
worth of bonds, which were listed today on the Singapore Exchange's (SGX) bond
market. In a filing with the SGX yesterday (April 8), Maybank said the notes, which
were issued yesterday, would be due in 2028 and would pay an annual interest rate of
1.8%.
"The notes will be quoted and traded in US dollars," Maybank said, without specifying
how proceeds from the bond sale will be used. The lead managers and bookrunners of
the notes are Maybank Kim Eng Securities Pte Ltd and The Hongkong and Shanghai
Banking Corp Ltd, according to Maybank.
For comparison, Maybank's US$28 million bonds' annual coupon of 1.8% is higher
than Malaysia's overnight policy rate (OPR) of 1.75%. Bank Negara Malaysia's (BNM)
Monetary Policy Committee (MPC) on March 4, 2021 decided to maintain the country's
OPR at 1.75%, the central bank said in a statement that day. "The MPC considers the
stance of monetary policy to be appropriate and accommodative," said BNM.
Among major corporate bond issuers, Petroliam Nasional Bhd (Petronas) said in a
statement on March 17, 2021 that Petronas had priced a US$600 million single-tranche
seven-year note issued by its wholly-owned subsidiary Petronas Energy Canada Ltd
(PECL) at 85 basis points over the seven-year US Treasury to yield 2.112% a year.
"Proceeds will be utilised by PECL to fund its continued development and production
activities, debt refinancing and for general corporate purposes," Petronas said.
On Bursa Malaysia today, Maybank's share price rose two sen or 0.24% at 11.57am to
RM8.30, which gives the group a market capitalisation of about RM93.29 billion.
Maybank has 11.24 billion issued shares, according to the group's latest quarterly
financial report.
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