KUALA LUMPUR (March 8): Malaysia's ¥200 billion (RM7.3 billion) 10-year Samurai Bond  will cost the government 0.63% a year, according to Ministry of Finance (MoF). 

A random check on Bloomberg data, the coupon rate for Samurai Bond is fixed at 0.53% per annum -- the lowest rate in Asean. The bond papers are guaranteed by Japan Bank for International Cooperation (JBIC) at a guarantee fee of 0.1% a year, bringing the total annual cost to be 0.63%. 

“This (Samurai Bond) 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. The ministry 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%),” it said.

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, 2019.

During the engagement period, MoF said investors expressed strong interest and this reflected 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 this issuance.