Export-Import Bank of Malaysia Berhad (MEXIM) plans to issue 5-year USD bonds with benchmark size and may be priced as early as today. MEXIM is a fairly frequent issuer in the USD bond market with yearly re-taps since 2012

MEXIM: Our views on new USD bonds

·         Export-Import Bank of Malaysia Berhad (MEXIM) plans to issue 5-year USD bonds with benchmark size and may be priced as early as today. MEXIM is a fairly frequent issuer in the USD bond market with yearly re-taps since 2012.

·         The bonds rank senior unsecured with a change of control put at par when MEXIM ceases to be wholly-owned by the Government of Malaysia, which essentially prevents any sale of government stake to avoid diminution of its role as policy bank thereby the government’s willingness to support.

·         On pricing, IPG was T+140bps. We think the closer comps are MALAYS’7/21 (T+86, G+89) and RHBCMK’10/16 (T+131, G+131, a weaker non-corp rated at A3/BBB+), EXIMBK 7/21 (T+130, G+133, a weaker Indian policy bank rated at Baa3/BBB-). Another perspective on pricing is KEXIM gives ~30bps G-spread over KOREA for similar tenor, and if we apply this on MEXIM would mean G-spread of about 119bps. The fair value for MEXIM should be in the region of T+117.5 area, in our view.