Samurai bond rate update next month
KUALA LUMPUR: Finance Minister Lim Guan Eng will give an update on the subscription rate of Malaysia’s Samurai bond next month.
“I will give an update on this next month,” said Finance Minister Lim Guan Eng after the launch of RM2 billion Syarikat Jaminan Pembiayaan Perniagaan Bhd guarantee schemes, here, yesterday.
The Samurai bond issuance is seen as a refinancing exercise to trim Malaysia’s debt.
Last week, Lim embarked on a three-day investment roadshow to Japan to invite deep-pocket investors to take part in the forthcoming issuance of 200 billion yen (RM7.38 billion) bond.
The roadshow was organised by Daiwa Markets Ltd, in collaboration with Affin Hwang Investment Bhd. HSBC Bank Malaysia Bhd and Mizuho Bank (Malaysia) Bhd, are joint lead arrangers for the issuance.
The 10-year Samurai bond, which will be issued in Tokyo, follows Japanese rules and regulations and is being guaranteed by the Japan Bank of International Cooperation.
Lim’s investment roadshow is a followup on Japanese Prime Minister Shinzo Abe agreeing to Prime Minister Tun Dr Mahathir Mohamad’s proposal to issue 200 billion yen-denominated bonds.
Dr Mahathir had previouly said the bond issue would be used to retire old debts, especially that of 1Malaysia Development Bhd (1MDB), which were undertaken at a very high repayment rate.
The bond comes with a very attractive indicative coupon rate of 0.65 per cent, whereas the 1MDB Energy Ltd dollar bond has a costly 5.99 per cent coupon rate.
Economists have said the Samurai bond would save Malaysia from entering into a deeper pit of financial woes.
They also said as long as the government handles its debt payments well and timely, it would be able to meet the fiscal deficit target of 3.4 per cent for this year.