Govt raises RM81b in bond issuances during 1H19

pic by HUSSEIN SHAHARUDDIN

THE government has issued bonds worth a total of RM81.3 billion for the first six months of the year, Finance Minister Lim Guan Eng (picture) said in a parliamentary written reply on Tuesday.

The amount includes RM31 billion raised via Malaysian Government Securities, RM36 billion from Malaysian Government Investment Issue, RM6.5 billion from Treasury Bills and RM7.8 billion through external borrowings which comprise the issuance of a 10-year Samurai bond in March.

Proceeds from the bond sales will be used to refinance matured debts worth RM23.2 billion and finance the government’s RM22.4 billion fiscal deficit, Lim said.

The balance amounting to RM35.7 billion is used to refinance maturing debts for the period of June to December and the fiscal deficit in the second-half of this year.

Lim was responding to a question by Datuk Alexander Nanta Linggi (GPS-Kapit), who asked the minister to state the number of bonds issued since Pakatan Harapan took over the federal administration.

He said the issuance of the bonds is in line with financial regulations set out in the Loan (Local) Act 1959, the Government Funding Act 1983 and the External Loans Act 1963, which stipulate that government loans can only be made to finance development expenses and refinance mature debts.

The External Loans Act 1963 has also set a limit for external borrowings at RM35 billion, he added.

Putrajaya is now considering a second yen-denominated debt sale following the success of the ¥200 billion (RM7.34 billion) Samurai bond issued earlier.

The first Samurai bond, with a coupon rate of 0.63% per annum, was oversubscribed by more than 1.6 times at ¥324.7 billion.

The sale marked the country’s successful return to the Japanese bond market after 30 years.

In a statement issued last month, Lim said the Japan Bank for International Cooperation has agreed to guarantee the second Samurai bond issuance and reduce the interest rate to 0.5% with a 10-year maturity term.

Lim also noted that Prime Minister (PM) Tun Dr Mahathir Mohamad has received Japanese PM Shinzo Abe’s approval for the bond issuance.

Dr Mahathir had previously confirmed that Malaysia was considering the issuance of a second bond from Japan as the country sought cheap funding alternatives to plug the government’s financial gaps.

He said the bond would allow Malaysia to capitalise on the exchange rate variance between the Japanese currency and the US dollar.

Japan, the world’s third-largest economy, is known for its ultra-low rates. In January, the Bank of Japan pledged to keep its 10-year government bond yields at 0% as central banks loosened monetary policies in the face of a global economic slowdown.