Penang Port launches debut MTN programme

Penang Port has launched its first Ringitt MTN programme, bringing new sophistication to the local bond market.

A five-year, RM80 million ($21 million) commercial paper/medium term note (MTN) programme for Penang Port has been successfully launched, said lead manager ABN Amro Bank.

Proceeds from the RM80 million programme will be used mainly to refinance all existing loans from the Employees Provident Fund (EPF) which was previously taken to fund Penang Port's infrastructure projects, the bank said in a statement Wednesday.

With 95% of Malaysia's international trade being handled by seaports, Penang Port, which was incorporated in 1993 and operates and manages port and ferry services, has focused on a supply-driven approach to port development.

The port's board member, Encik Mohamed Omar, said in the statement that Phase 2B of the North Butterworth Container Terminal project was implemented earlier this year and would involve the construction of an additional 300 metre wharf, a second access bridge and the reclamation of 25 hectares of seabed for a container yard. The project should be completed by 2005.

The bank also said the RM80 million MTN programme is a significant milestone in Penang Port's corporate history and contributes further towards the development of the domestic private debt securities market.

Besides this, it would lead to the disintermediation of the banking system while, according to the Penang Port, the benefits are potentially lower funding costs.

The programme has been accorded a long term rating of A2 and a short-term rating of P1, by Rating Agency Malaysia.

Key factors supporting the rating include Penang Port's strong captive cargo base from its hinterland, strong financial fundamentals, a sound operating track record in the port business and the implied support from the Ministry of Finance by virtue of its 100% ownership in the company.

ABN Amro Bank was appointed lead manager for the programme with the agreements formalised and signed on 26 September by the bank's managing director for Malaysia, Theo J. Bark, and Mohamed Omar.

Bark was quoted as saying in the statement that the bank's appointment was a reflection of Penang Port's confidence in ABN Amro Bank's capabilities and expertise in the Ringgit bond market.

Parties to the programme included Maybank Trustees acting as trustee for the programme, and the underwriters - ABN Amro Bank, Perwira Affin Bank Bhd and Arab-Malaysian Merchant Bank.

Tender panel banks include ABN Amro Bank, Affin Discount Bhd, Amanah Short Deposits Bhd, Arab-Malaysian Merchant Bank Bhd (KLSE:AMMB), Bumiputra-Commerce Discount House Bhd, Commerce International Merchant Bankers Bhd, Deutsche Bank (Malaysia) Bhd, KAF Discounts Bhd and Perwira Affin Bank Bhd.


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