CIMB eyes Aussie bonds

CAPITALISING on Malaysia’s lead in the Islamic financing market, CIMB Group Holdings Bhd is said to have held talks with Australia’s big banks about issuing the country’s first Islamic bonds.

The Australian newspaper reported that CIMB’s capital markets head in Sydney Michael Forde said major lenders Down Under could become the first Australian companies to tap Malaysia’s sukuk market next year as they sought ways to access the growing pool of cashed-up Muslim
investors.

“National Australia Bank, Australia’s fourth-largest by market value, would be keen to sell up to A$500 million (RM1.57 billion) of sukuk next year once it had approval from the banking regulator,” the paper said, citing sources.

“Diversity of funding is very important (for the banks), so this is just another market to tap,” Mr Forde said. “I think there will be significant appetite and demand from investors in those markets for Australian credit.”

CIMB has been seeking to expand its reach within the region, opening its Australian operations last month after acquiring the equity and investment banking operations of Royal Bank of Scotland.

Forde also reportedly said Malaysia’s second-largest lender would also be targeting major mining companies as it sought to bring Australian companies to the fast-growing pool of Muslim wealth, which the World Bank expects to grow by 10-15% next year.

“We do see it as a core differentiator for us, given that no one else in Australia has any expertise in this,” Forde said.

“With the shift of capital globally to Asia, you’ve got to expect that’s going to filter down.”

Interest in Islamic finance has grown since the global financial crisis as companies look for new ways to tap emerging-market investors. More Asian companies, such as commodity trader Noble Group, are also using sukuk as a source of attractively priced funding amid turbulence in world debt markets, said the paper.

Talal Yassine, managing director of Islamic asset manager Crescent Wealth, said he would be talking to Malaysian banks such as CIMB about forming joint ventures to target Australia’s mortgage and pension industries at the World Islamic Economic Forum in Johor this week.

“Malaysian banks are looking to take the next step, not only in Australia but also across the rest of Asia.”