RHB Investment Bank Berhad Arranges RM950 Million Primary Collaterised Loan Obligations Transaction

Kuala Lumpur, January 11, 2007 : RHB Investment Bank Bhd (“RHB InvestBank”) is arranging a Primary Collateralised Loan Obligation (“Primary CLO”) transaction that will raise RM950 million for a group of 33 Malaysian companies.

Under the deal, RHB InvestBank will arrange new financing facilities for these 33 companies that have met a list of pre-determined criteria. The criteria have been designed to ensure that only quality borrowers spread over a wide cross-section of 15 different industries were considered. At the close of the transaction, these loans will be sold simultaneously to a special purpose vehicle, Prima Uno Bhd (“Prima Uno”).

“To raise the required sum to purchase the loan facilities, Prima Uno will issue RM950 million five-year bonds backed by these 33 loans,” according to the Chief Executive Officer of RHB InvestBank, Mr Chay Wai Leong.

The bonds will be issued in five different classes as follows:

• Super Senior A Bonds amounting to RM290 million rated AAA
• Super Senior B Bonds amounting to RM335 million rated AAA
• Senior Bonds amounting to RM190 million rated AAA
• Mezzanine Bonds amounting to RM40 million rated AA, and
• Subordinated Bonds amounting to RM95 million rated BB

The ratings of these bonds have been preliminary assigned by Malaysian Rating Corporation Bhd. Nomura Malaysia Sdn Bhd is the technical adviser for the CLO transaction.

A Primary CLO is a form of asset securitisation whereby debt securities, in this case bonds, are issued backed by a portfolio of loans. Unlike other versions of CLOs, a Primary CLO such as the one undertaken for Prima Uno funnels new capital to borrowers as new loans are involved.

Mr Chay said the Super Senior A Bonds, Super Senior B Bonds, Senior Bonds and Mezzanine Bonds would be placed out by RHB InvestBank to both Malaysian and offshore investors. The Subordinated Bonds will be subscribed by the corporate borrowers.

On an ongoing basis, the servicing of the coupons and redemption of the bonds by Prima Uno will be backed by cash flows generated from the loan assets acquired, that is from the interest collections and principal repayment from the corporate borrowers, the timing of which are set to match the coupon and redemption profile of the bonds.

The Securities Commission approved the transaction in August 2006.

Mr Chay said the Prima Uno Primary CLO had been structured to meet the needs of companies that had intended to tap the debt capital market for more cost-effective long-term financing but found it uneconomical to do so because of the relatively small amount of funding they required compared to a typical bond issue.

“By tapping the debt capital market on the strength of a diversified pool, and based on the structure of the Primary CLO, the borrowers are not only able to reap the benefits of economies of scale, they can at the same time obtain more competitive pricing on their loans by leveraging on the superior credit rating that a diversified pool is able to command from the rating agency vis-à-vis their stand-alone rating,” he added.

For the Prima Uno CLO transaction, RHB InvestBank has incorporated invaluable input from investors as well as feedback on previous CLO transactions from the market so as to improve its CLO structure further.

“For instance,” Mr Chay said, “additional classes have been added to the bonds to provide a wider choice of investment options to meet the different risk-versus-returns appetite of different investors. We have built in an additional Super Senior tranche targeted at the most risk-averse investors whilst still offering a yield pick-up over similar bond issuances.”

To further enhance the quality and diversity of the borrowers in the Prima Uno CLO, the entry level credit rating for each borrower has been set at a minimum of BBB+. In addition, the quantum of loan that can be extended to each of the 33 companies has been reduced.

As a result, the Prima Uno CLO has also set a new standard, for having the highest number of corporate borrowers in a single transaction for any CLO done in Malaysia. For those who invest in the bonds, this means that exposure to individual borrower risk has been further reduced, with concentration risk spread over 15 different industries.

These additional features, according to Mr Chay, will help in the further development of the domestic securitisation market.

In the meantime, he said, RHB InvestBank would continue to introduce more innovations into the Malaysian market. “The demands of our customers will become more complex, so more sophisticated financing facilities are required to meet their needs in the future,” he added.

Issued on behalf of RHB Investment Bank Bhd by Group Corporate Communications, RHB Capital Bhd. For information, please contact: En Badrulnizam Bahaman Tel: +603-9280 5456 or Mr Yeoh Guan Jin at Tel: +603-9280 2536.