This report does not constitute a rating action. The first forays into capital markets by Brunei's two largest banks is a positive step toward diversifying the sector’s funding profile. However, meaningful change may take a while.. Financial institutions in Brunei have ample liquidity and costs of funds are low. These factors could limit future issuance. Bank Islam Brunei Bhd. (BIBD; A-/Stable/A-2) and Baiduri Bank Sendirian Bhd. (A-/Stable/A-2) issued capital market instruments for the first time. BIBD launched a local currency Sukuk Wakalah program of 200 million Brunei dollars (BND) on Oct. 5. Baiduri priced its first 280 million Singapore dollar-denominated bond Oct. 19. These issuances represent a departure from the historical norm in Brunei. The debt capital market has been
