Optimal Group of Companies’ dual debt, dual currency $468m and RM1.37bn project-finance based financing
Aseanbankers Malaysia, HSBC and Malayan Banking were joint lead managers
The Optimal Group, a three-entity integrated petrochemical complex located in Malaysia, needed to be refinanced to the tune of $1.35bn. Objectives included competitive financing, a more diverse source of funds, a broader investor base and an extension to the debt maturity profile.
The solution was a dual currency, dual instrument structure, combining US dollars and Malaysian ringgit to create a natural hedge against currency fluctuations. The syndicated loan market was tapped for the dollar facility and the domestic bond market was tapped for the ringgit facility, requiring structuring to appeal to two very disparate groups of financiers. To this end, the ringgit facility was structured as an Islamic bond.
Even without corporate guarantees from the sponsors, the Optimal credit drew strong favour from investors. Indeed, price tension and massive demand caused the initial price guidance to be revised downwards, with the bonds eventually 4.6 times oversubscribed. The loans were oversubscribed by more than 30%, priced at levels comparable to corporate loans.
