Saturday, October 19

Malaysia picks trio as lead arrangers for Samurai bond

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Lim (centre) is seen with Japanese ambassador Dr Makio (third right), Finance Deputy Minister Datuk Amiruddin Hamzah (third left), Treasury secretary-general Datuk Ahmad Badri Mohd Zahir (second right), and representatives of Mizuho, HSBC and Daiwa after being presented the appointment letters of the lead arrangers for the Samurai bond. — Bernama photo

PUTRAJAYA: Mizuho Bank (Malaysia) Bhd, HSBC Bank Malaysia Bhd and Daiwa Capital Markets Ltd (in partnership with Affin Hwang Investment Bank) have been appointed as joint lead arrangers for the 10-year 200 billion yen (RM7.6 billion) Samurai bond.

Announcing this at the Treasury here yesterday, Finance Minister Lim Guan Eng said the appointments were made after six proposals were shortlisted from the 27 proposals received by the Finance Ministry.

“We are convinced that these three are the best institutions which have the necessary experience, expertise and conviction and faith in Malaysia’s economy,” he said in a press conference after presenting the appointment letters to the representatives of the lead arrangers for the Samurai bond.

As part of a government-to-government arrangement, Lim said the Japan Bank of International Cooperation (JBIC) would be guaranteeing the bond.

“This will allow the government of Malaysia to pay all-inclusive and indicative coupon rates of less than 0.65 per cent per annum, including the guarantee fee.

“The bond is expected to be issued in the next few months. We hope the issuance of this bond could be done as soon as possible after my trip to meet all the relevant investors in Tokyo next month,” he said.

Lim said Prime Minister Tun Dr Mahathir Mohamad had directed him, in his capacity as the finance minister, to handle the entire bond issuance and lead the Malaysian delegation to Tokyo.

“The issuance of this Samurai bond is a testament to the confidence of the Japanese government in the leadership of Dr Mahathir and marks the intimate relationship between the two countries,” he said.

He thanked the Japanese government for providing the guarantee for the bond and Japanese ambassador Dr Makio Miyagawa for his invaluable assistance and contribution towards ensuring a smooth negotiation exercise.

During the 2019 Budget presentation in November last year, Lim announced that the Japanese government had offered to guarantee 200 billion yen of Samurai bond issuance with a 10-year tenure.

A Samurai bond is a yen-denominated bond issued in Tokyo by a non-Japanese company or entity and subject to Japanese regulations.

The last Samurai bond was issued in 1989.

When asked whether the Malaysian government was considering another Samurai bond, Lim said the Japanese government had very generously offered another tranche.

“We want it (the first bond issue) to be a success then we will look into second and third tranches,” he said.

Asked if Nomura Holdings Inc was one of the candidates as lead arrangers, Lim said that the Japanese financial holding company was a candidate, but denied that the company was dropped due to a report issued by Nomura Global Research.

“We select the lead arrangers based on merit, which one is best and able to give attractive price,” he said.

Last week, Nomura Global Research said Malaysia’s 2018 fiscal deficit would deteriorate to 3.9 per cent of gross domestic product (GDP). However, Lim dismissed the report as untrue and said that the government was confident of achieving a fiscal deficit of 3.7 per cent and 3.4 per cent of GDP in 2018 and 2019 respectively. —Bernama