BPMB to go big in credit wrap facility

KUALA LUMPUR: Bank Pembangunan Malaysia Bhd (BPMB) wants to aggressively promote its credit wrap guarantee facility for corporations to raise funds via the bond market this year.

Source from (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/benkp/Article/
Published: January 29, 2013

Its president/managing director Datuk Zafer Hashim said with a high risk weighted capital ratio of 34 per cent and being a triple A-rated bank, BPMB is in the right position to offer credit wrap facility.

He said corporations seeking financing for long-tenure projects can leverage on the bank's AAA rating and tap the bond market to issue bonds.

Zafer said with the bank having no access to retail market, the cost of fund is on average higher by two percentage points than commercial banks.

"That is why for us to give direct lending, the rate that we charge may not be attractive. But by providing credit wrap, the corporations can access the bond market directly," he said in an interview with Business Times here recently.

He said BPMB had tested this market last year with a RM150 million facility and the party involved had issued bonds based on the bank's credit wrap.

"So this year, we want to go big in this offering for projects that require financing of more than 15 years. The room that we can do credit wrap is just huge."

Zafer said this is the direction the bank is heading for in 2013 as it supports quite a number of government projects.

"Many more infrastructure projects are coming on stream in 2013, such as highways and Private Finance Initiatives. Our position is quite robust."

Zafer, who has been at the helm of BPMB since August 2009, said the bank's assets have grown by about seven per cent until 2011 and it projects the figure to close the financial year ended December 31 2012 at RM33 billion.

For the year ended December 31 2011, the bank posted a 20 per cent year-on-year increase in net profit to RM462 million due to higher income from loans and advances.

It registered a six per cent gross loan growth, largely contributed by loan disbursement to infrastructure projects totaling RM2.9 billion.

The total equity of the group increased to RM7.4 billion as at December 31 2011.