Govt's 200b yen Samurai bond priced at full cost of 0.63%

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KUALA LUMPUR: The Government of Malaysia's 200bil yen (RM7.3bil) 10-year Samurai bonds due 2029 were successfully priced at a full cost of 0.63% per annum.

The Finance Ministry said on Friday this marks the government’s return to the Japanese yen bond market after a 30-year absence. This will be the largest  Japan Bank for International Cooperation (JBIC) guaranteed sovereign bond issuance in the market.

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. 

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

“Proceeds from the offering will be used by the Government for its general purposes, financing development expenditures that among others include building schools, hospitals, public roads and utilities,” it said.

The issuance process started with a two-day investor roadshow in Tokyo on Feb 7-8 , which was led by Finance Minister Lim Guan Eng. This was followed by an official marketing exercise from March 4 to 7. 

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

The issuance was received extremely well across the investor spectrum and picked up by quality Japanese investors. 

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

“The opportunity offered by the Japanese Government for the government of Malaysia to tap into the Samurai bond market further enhances Malaysia’s position as a leading investment hub within the region, while diversifying its stable funding base,” it said.

Mizuho Bank, HSBC Malaysia and Daiwa Securities in collaboration with Affin Hwang Investment Bank acted as joint lead arrangers and bookrunners for this issuance.