Malaysia’s Samurai bond oversubscribed


The government’s ¥200 billion (RM7.34 billion) 10-year Samurai bond issuance has been successful with an oversubscription of more than 1.6 times at ¥324.7 billion, said Finance Minister Lim Guan Eng.

The oversubscription of the yen-denominated bond reflects the confidence of various Japanese institutions and investors on the country’s economy, Lim told the Dewan Rakyat yesterday.

“The Samurai bond has been successfully issued, which shows government’s effort in ensuring that people benefit from this,” he said in response to a supplementary question by Datuk Abdullah Sani Abdul Hamid (Pakatan Harapan-Kapar) on the government’s move in attracting foreign investors to Malaysia.

“Although our coupon rate was estimated to be at 0.65%, we managed to lower it to 0.63% per annum,” Lim added.

Guaranteed by the Japan Bank for International Cooperation (JBIC) for a maturity tenure of 10 years, the Samurai bond marked the government’s return to the Japanese bond market after a 30-year absence.

The yen-denominated bond was initiated by Prime Minister Tun Dr Mahathir Mohamad who made the request to his Japanese counterpart Shinzo Abe in June last year, intended to repay borrowings of
the debt-ridden 1Malaysia Development Bhd (1MDB).

To recall, this was the largest JBIC-guaranteed sovereign bond issuance in the market.

Proceeds from the issuance of Samurai bond would be used to fund infrastructure developments including the construction of schools, hospitals, roads and utilities.

Mizuho Bank Ltd, HSBC Bank Malaysia Bhd and Daiwa Capital Markets Ltd in collaboration with Affin Hwang Investment Bank Bhd acted as joint lead arrangers and bookrunners for the issuance.

Meanwhile, Lim informed the august house that Tabung Harapan Malaysia is a one-off effort to help reduce the nation’s RM1 trillion debt burden.

The government has no intention to make fund an annual tradition, he stressed.

“No, we do not expect to do it every year. The fund was only created after looking at the reaction of the public, as people wanted to show their disgust at 1MDB,” he said in reply to a supplementary question from Awang Hashim (PAS-Pendang).

Awang had asked if the Tabung Harapan would be an annual tradition if the government needed more money to slash its debt.

Tabung Harapan was closed on Jan 14, 2019, with a total contribution of RM202.72 million.

Lim said the fund is managed by an Account Committee, which is bounded by a trust deed — a binding letter which details the purpose of the establishment, functions and roles of the committee in administering the account and the usage of the funds collected.

The committee will be monitored by the Accountant-General and Auditor-General through federal government financial statements.

Lim said the committee will meet at least twice a year, chaired by the Treasury secretary-general and the fund credited from the account will solely be used to pay off government’s debt.