Samu­rai bond to help set­tle 1MDB debts

The Star Malaysia - StarBiz - - News -

PE­TAL­ING JAYA: The RM7.4bil Samu­rai bond is­suance, which the Ja­panese gov­ern­ment has of­fered to guar­an­tee, may in­volve set­tling 1Malaysia De­vel­op­ment Bhd’s (1MDB) debts.

May­bank Kim Eng said in a re­port that the pro­posed bonds, which was an­nounced at Bud­get 2019 last week, would be used to re­tire some of the coun­try’s costly loans.

“We think this could mean 1MDB dol­lar debts, which are now con­sid­ered as com­mit­ted gov­ern­ment guar­an­tees. The 1MDB En­ergy Ltd dol­lar bonds cur­rently pay a costly 5.99% coupon, with US$1.75bil (RM7.3bil) equiv­a­lent out­stand­ing, close to the Samu­rai bond pro­ceeds.”

Ac­cord­ing to Ber­nama, the Samu­rai bond is cur­rently be­ing dis­cussed fur­ther at the bi­lat­eral meet­ing be­tween Prime Min­is­ter Tun Dr Ma­hathir Mo­hamad and his Ja­panese coun­ter­part, Shinzo Abe.

The three-day work­ing visit to Ja­pan kicked off on Mon­day.

Ber­nama re­ported yes­ter­day that Dr Ma­hathir had ex­pressed his grat­i­tude to Abe and his gov­ern­ment for their help in eas­ing Malaysia’s fi­nan­cial woes.

Dr Ma­hathir said Abe and his gov­ern­ment had adopted a very pos­i­tive at­ti­tude to­wards Malaysia’s fi­nan­cial pres­sures and the ac­tions it had taken.

“Prime Min­is­ter Abe also as­sured us that if in fu­ture there is a need to seek Ja­panese sup­port in solv­ing our fi­nan­cial prob­lems, he is ready and the Ja­panese gov­ern­ment is ready to con­sider.”

It was an­nounced in the bud­get that the Ja­panese gov­ern­ment had guar­an­teed 200 bil­lion yen of 10-year Samu­rai bonds, via Ja­pan Bank of In­ter­na­tional Co­op­er­a­tion, at an in­dica­tive coupon of 0.65%.

The bond will be is­sued be­fore March next year.

Abe also said the yen credit is fea­si­ble with the fo­cus on trans­porta­tion, ed­u­ca­tion and hu­man re­source de­vel­op­ment.

The Ja­panese Prime Min­is­ter said a team of ex­perts from Ja­pan’s rail­way com­pa­nies would be dis­patched to Malaysia at the end of this month as part of a study to­wards the ob­jec­tive.

“I told Dr Ma­hathir that Ja­pan will study, with Malaysia, the pos­si­bil­ity of ex­tend­ing yen loan with a pri­mary fo­cus on trans­porta­tion, ed­u­ca­tion and hu­man re­source de­vel­op­ment. I hope this study will lead to con­crete co­op­er­a­tion in fu­ture,” Abe was quoted as say­ing in Ber­nama’s re­port.

Malaysia had asked for yen loan dur­ing Dr Ma­hathir’s first meet­ing with Abe in June to help re­solve the Malaysian gov­ern­ment’s debt.

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