Government Successfully Prices RM7.3B Samurai Bond

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The Malaysian government successfully priced its 200 billion yen (RM7.3 billion) 10-year Japan Bank for International Cooperation (JBIC) Guaranteed Samurai Bond at the full cost of 0.63 per cent per annum to the Malaysian government.

In a statement, the Finance Ministry said this marked the government’s return to the Japanese yen bond market after a 30-year absence.

“This will be the largest JBIC-guaranteed sovereign bond issuance in the market,” said the ministry.

As part of a government-to-government arrangement, the issuance is guaranteed by JBIC under its ‘Guarantee and Acquisition Toward Tokyo Market Enhancement (GATE)’ programme, the first JBIC guarantee undertaken by Malaysia.

The guarantee is part of the effort by both Prime Minister Dr Mahathir Mohamad and Prime Minister Shinzo Abe to foster closer economic and cultural ties between Malaysia and Japan.

Proceeds from the offering would be used by the government for financing development expenditure which, among others, include building schools, hospitals, public roads and utilities.

The issuance process commenced with a two-day investor roadshow, led by Finance Minister Lim Guan Eng in Tokyo on Feb 7 and 8.

This was followed by an official marketing exercise from March 4 to 7.

During the engagement period, investors expressed strong interest in the issuance, and this reflected their confidence towards Malaysia’s stable macroeconomic fundamentals, governance and structural reforms.

As a result, the issuance was extremely well received across the investor spectrum and picked up by quality Japanese investors.

These investors are specialised banks (37.9 per cent), city banks (35 per cent), life insurance companies (13.9 per cent), regional banks (6.5 per cent), shinkin banks (3.8 per cent) and others (2.9 per cent).

The opportunity offered by the Japanese government for the Malaysian government to tap into the Samurai bond market further enhanced Malaysia’s position as a leading investment hub within the region while diversifying its stable funding base.