KUALA LUMPUR (March 8): Three visits to Japan since returning as Prime Minister in May last year have paid off for Tun Dr Mahathir Mohamad and his administration, as Malaysia managed to price ¥200 billion (RM7.3 billion) Samurai bonds at the lowest rate in Asean.

The coupon rate for the 10-year Samurai bonds is fixed at 0.53% per annum, with the debt papers guaranteed by Japan Bank for International Cooperation (JBIC) at a guarantee fee of 0.1% a year.

Malaysia’s secured rate for the Japanese papers is much lower than its Asean peers, and marks a return to the Japanese yen bond market after three decades.

Last August, the Philippines issued ¥40.8 billion 10-year Samurai bonds at a coupon rate of 0.99% per annum, while Indonesia raised ¥100 billion in the same market last May. The Indonesian Samurai bonds consisted of four series, of which ¥8.5 billion was done over a 10-year tenure, at a coupon rate of 1.27% per annum.

In a statement today, the Ministry of Finance (MoF) said by including a 0.1% guarantee fee for the bond, the total cost to Putrajaya amounts to 0.63% per annum.

“This marks the government’s return to the Japanese Yen Bond market after a 30-year absence. This will be the largest JBIC-guaranteed sovereign bond issuance in the market,” MoF said.

MoF said the money raised will be used for general purposes, financing development expenditures that among others include building schools, hospitals, public roads and utilities.

As part of a government-to-government arrangement, MoF said 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 debt papers are ‘extremely well’ received across the investor spectrum and picked up by quality Japanese investors.

“These investors are specialized banks (37.9%), city banks (35%), life insurance companies (13.9%), regional banks (6.5%), shinkin banks (3.8%) and others (2.9%).”

MoF said the issuance process commenced with a two-day investor roadshow in Tokyo on Feb 7 and 8 this year, followed by an official marketing exercise between March 4 and March 7.

During the engagement period, MoF said investors expressed strong interest and this reflects their confidence on Malaysia’s stable macroeconomic fundamentals, governance and structural reforms.

Mizuho Bank, HSBC Malaysia and Daiwa Securities, in collaboration with Affin Hwang Investment Bank, acted as Joint Lead Arrangers and Bookrunners for the issuance.