Dr M: Putrajaya mulling another round of Samurai bonds

(MalayMail) – Prime Minister Tun Dr Mahathir Mohamad confirmed today that the government is considering another issue of so-called Samurai bonds using loans from Japan.

In a press conference today, he explained that this was because the Japanese government was offering to finance this at a rate lower than the 0.65 per cent for the previous issue earlier this year.

In February, Putrajaya reintroduced yen-denominated government bonds to end over three decades of Samurai bonds’ absence here.

“So now, we are studying how we can use this cheap money for overcoming our financial problems,” he told a press conference after opening the World Tourism Conference (WTC) 2019.

Business daily The Malaysian Reserve (TMR) earlier quoted Japan’s ambassador to Malaysia, Makio Miyagawa, as saying that Putrajaya and Tokyo were engaged in talks for a second Samurai bond issue after the success of the initial ¥200 billion (RM7.34 billion) 10-year secured bonds sold in March.

Miyagawa reportedly said both Dr Mahathir and Finance Minister Lim Guan Eng expressed eagerness and registered strong interest for another bond issuance using the yen.

“We are now working very hard to reduce the interest rate. The amount of the bond could be similar, depending on the Finance Ministry, but the interest rate would surely be a substantially smaller figure,” Miyagawa was quoted saying by TMR.

For the initial Samurai bond issuance, Mizuho Bank Ltd, HSBC Bank Malaysia Bhd and Daiwa Capital Markets Ltd had collaborated with Affin Hwang Investment Bank Bhd as joint lead arrangers and bookrunners.

The bond was issued using funds from Japan Bank for International Cooperation (JBIC) and was the largest such sovereign bond issuance in the market then.

Dr Mahathir previously explained that the yen-denominated bonds would allow Malaysia to capitalise on the exchange rate variance between the Japanese currency and the US dollar to help lessen the burden of the country’s debts.