Malaysia CIMB delays S$200 mln bond sale

Malaysia's CIMB Bank the country's second largest lender, has delayed a S$200 million ($139 million) bond sale as the credit crisis boosted borrowing costs, a banking source told Reuters on Thursday.

But the bank went ahead and priced another issue of 1 billion Malaysian ringgits ($292 million) worth of bonds at a yield of 6.7 percent a year, a spokesman for the bank said in Kuala Lumpur.

CIMB wanted to sell perpetual bonds in Singapore, which would have qualified as Tier 1 capital, according to a term sheet seen by Reuters earlier.

"CIMB told investors that it will consider approaching the market once conditions have normalised," said the source in Singapore, who had direct knowledge of the deal and who had seen the Malaysian lender's update to investors.

Analysts said issuers have shunned the Singapore debt market, which is reeling from tighter lending conditions since the collapse of Lehman Brothers in mid-September.

"I have not heard anyone issuing a bond in Singapore in the last two weeks," said Selena Ling, an analyst at Oversea-Chinese Banking Corp. "The credit concerns and elevated interbank lending rates have forced issuers to pull back."

The two-year offered swap rate , a key indicative rate for shorter-dated bonds, has shot up by about 40 basis points to 2.33 percent since the collapse of Lehman Brothers.

CIMB's proposed bonds were rated BBB-minus by Standard & Poor's and Fitch Ratings.

CIMB-GK, Singapore's DBS Group and UBS were the lead managers for the sale.

- Reuters