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Citi and CIMB debut Malaysian CDS

Citi and Malaysia’s CIMB have conducted the first interbank credit default swap (CDS) denominated in Malaysian ringgit.

The 25 million ringgit ($7.2 million) swap has a maturity of one year, according to parties familiar with the deal, and is referenced on Projek Lebuhraya Utara Selatan, a large infrastructure developer in Malaysia.

“The development of the ringgit credit derivatives market is critical as it will enhance the efficiency of the Malaysian corporate bond and loan markets, and will significantly strengthen the robustness of the country’s financial system from credit risks,” says Lee Kok Kwan, group treasurer of CIMB in Kuala Lumpur.

The debut local currency CDS in Malaysia follows a deal by JP Morgan and Korea Development Bank late last year to offer the first Korean won-denominated credit default swap.

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