MALAYSIA PICKS ARRANGERS
Notes will be issued in Q1 and may raise 200b yen, says source
MALAYSIA has hired banks for the country’s first Samurai bond sale in three decades, adding to a flood of yendenominated debt offerings by global borrowers tapping cheap funds in Japan.
The sale would be Prime Minister Tun Dr Mahathir Mohamad’s debut global debt sale since returning to power in May and embarking on spending cuts aimed at reining in the budget deficit.
Plans for the Samurai sale started from at least June, when Dr Mahathir picked Japan for his first overseas visit as prime minister and asked his counterpart Shinzo Abe for yen-denominated credit.
The country picked arrangers including HSBC Holdings Plc, Mizuho Financial Group Inc and Nomura Holdings Inc for the offering, which could raise about 200 billion yen (RM7.59 billion), according to people familiar with the matter. It aimed to sell the notes in the first quarter, said one of the people, asking not to be identified because the information was private.
Global borrowers have increasingly turned to Japan’s debt market to raise funds, as the Bank of Japan keeps interest rates near zero even as other central banks have hiked.
Issuance of Samurai bonds has surged 139 per cent in the current fiscal year, according to data compiled by Bloomberg.
Most of the proceeds from Malaysia’s bond sale will be used to repay “costly loans”, said Dr Mahathir in November last year, adding that there may be “other loans” from Japan that will carry low interest rates.
The planned 10-year yen bond offer will be guaranteed by Japan Bank of International Cooperation with the coupon rate set at 0.65 per cent, said Finance Minister Lim Guan Eng in November last year.
The Philippines priced its similar bonds at 0.99 per cent when it sold Samurai notes in August last year.
Details of the offering can still change, said the people. Representatives for the Finance Ministry, HSBC and Mizuho didn’t immediately respond to requests for comment. Nomura declined to comment.
Malaysia’s debt holds the fourth-lowest investment grade at Fitch Ratings, S&P Global Ratings and Moody’s Investors Service, and an “A” rating at Japan’s Rating and Investment Information Inc.
The cost of insuring the nation’s debt from non-payment using five-year credit default swaps has dropped nine basis points this year to 101, after rising 51 basis points last year, data compiled by Bloomberg showed.