Samurai bond attracts bids from 46 Japanese investors


THE ¥200 billion (RM7.34 billion) 10-year Samurai bond issuance by Malaysia attracted 46 Japanese investors including banks, Treasuries and insurance firms.

Finance Minister Lim Guan Eng (picture) stated in a parliamentary written reply last week, the offering attracted interest from specialised banks (37.9%), urban banks (35%), insurance companies (13.9%), regional banks (6.5%), Shinkin banks (3.8%) and others (2.9%).

Lim was responding to a question by Datuk Seri Reezal Merican Naina Merican (Barisan Nasional-Kepala Batas) who had asked the minister to state the success of the ministry’s delegation visit to Japan in early February, and to specify the selection criteria of Daiwa Capital Markets Ltd, Mizuho Bank (M) Bhd, HSBC Bank Malaysia Bhd and Affin Hwang Investment Bank Bhd as lead arrangers to the Samurai bond.

Lim had previously said the bond issue was oversubscribed by 1.6 times at ¥324.7 billion and is a testament of confidence in the country’s economy.

Lim added that his delegation to Tokyo had conducted 14 one-on-one meetings with fund managers, investors and analysts.

One presentation was held with over 30 financial institutions, with a separate session arranged for the Japan Bank for International Cooperation (JBIC), he added.

Following the trip, the Malaysian government on March 8 issued the JBIC-guaranteed yen denominated bond with a coupon rate of 0.63% per annum.

The Samurai bond — the largest sovereign bond issuance in the market — marked the government’s return to the Japanese bond market after a 30-year absence.

Lim said the overall cost of the bond was significantly lower when paired against the US dollar bonds issued by Goldman Sachs Group Inc for state fund 1Malaysia Development Bhd in May 2012 at 5.99% per annum. Goldman was the arranger and underwriter of the bond, which is redeemable in 2022.

On the issuance of the Samurai bond, Lim said the selection of the joint lead arrangers were done via request for proposal (RFP).

The Finance Ministry had issued RFPs to 34 local financial institutions registered with Bank Negara Malaysia and three international financial institutions in Japan. Out of the total, 14 RFPs suggested the issuance of a Samurai bond.

Lim said the ministry then made a detailed assessment to appoint the arrangers through a technical committee chaired by the Treasury secretary general.

Among the key considerations taken into account during the assessment were the experience and expertise of the bank as lead arrangers, understanding of the country’s economic and financial position, the ability of the bank to promote Malaysia to investors, their positioning in the top five most recent bond or sukuk league table and compliance with Foreign Exchange Administration rules.