Samurai bond lead arrangers were picked on merit, Guan Eng says

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PUTRAJAYA (Jan 18): The selection of the three lead arrangers for the upcoming issuance of Samurai bond was done based on merit, Finance Minister Lim Guan Eng said today.

Lim said the selection process was done fairly, without any discrimination against Nomura Holdings Inc.

"Yes, they (Nomura) submitted their proposals as well. We treated everyone fairly, and the selection was done based on merits," he told a press conference.

On Jan 10, Bloomberg, quoting anonymous sources, reported that Putrajaya has selected HSBC Holdings Plc, Mizuho Financial Group Inc and Nomura Holdings for the offering.

However, earlier today, Lim named Mizuho Bank (M) Bhd, HSBC Bank Malaysia Bhd and Daiwa Markets Singapore Ltd as the government's choice of lead arrangers for the 10-year Samurai bond issuance of ¥200 billion (RM7.6 billion).

The announcement came after Nomura Global Markets Research downgraded the Malaysian equity market to "underweight" from "neutral" previously, on poor earnings growth prospects, amid higher valuations and on lack of major expansionary reforms so far.

Lim, speaking at the press conference later, said the downgrading by Nomura was not a factor in the government's selection of the lead arrangers.

"Does it mean that if you write a nasty report on MoF (ministry of finance) today, we should in turn decline your entrance to attend the press conference here (at MoF)? I am not that kind of people. Whether it is Sin Chew or Utusan, they are still here. We treat everybody based on merits. They (the selected lead arrangers) give us a good price," he said.

Lim said the appointment was made after six proposals were shortlisted from the 27 received by MoF.

"The final decision was made after the MoF was convinced that these three were the best institutions which have the necessary experience, expertise and most importantly, conviction and faith in the Malaysian economy, to ensure that we will enjoy the lowest possible cost of funds," he said.

"As part of a government-to-government arrangement, the Japan Bank of International Cooperation (JBIC) will be guaranteeing the bond. This will allow the government of Malaysia to pay all-inclusive indicative coupon rates of less than 0.65% per annum, including the guarantee fee.

"The bond is expected to be raised in the next few months. I have been directed by Prime Minister Tun Dr Mahathir Mohamad in my capacity as the finance minister to handle the entire bond issuance and lead a Malaysian delegation to Tokyo in February 2019 to meet all the relevant investors to ensure a successful bond-raising exercise," he added.

Lim said the issuance of this Samurai bond is the testament of confidence the Japanese government has in the leadership of Dr Mahathir and a mark of the intimate relationship between the two countries.

"We would like to voice our thanks and appreciation towards the Japanese government for providing the guarantee for the bond, as well as to the Japanese ambassador (to Malaysia) Dr Makio Miyagawa for his invaluable assistance and contribution towards ensuring a smooth negotiation exercise," he said.

Lim said the last Samurai bond arrangements between Malaysia and Japan can be traced back to 1989.

On another matter, Lim also said the government is not discriminating against the opposition in the Cameron Highlands by-election campaign.

"We give the opposition RM100,000 (for the by-election) if you still remember. But nobody talks about that. When we were the opposition, the Barisan Nasional (BN) government didn't give us anything, but nobody asked whether they are discriminating or not," he said.

Lim also refuted media reports accusing him of using government projects to entice Cameron Highlands' voters.

"I think we are very different from BN because we do not promise any specific development project. We do not do that. What we are saying is we should have two governments — state and federal — to help develop Cameron Highlands together," he said.

"If we depend only on the state government, development may not be smooth, because Pahang has the highest debt in the country, they owe RM3.1 billion. Do they have sufficient funds to carry out the development they promised? Unlike the federal government, we are able to do so.

"So why not we get both the federal and state governments to work together? We are willing to work with the state government to develop Cameron Highlands together. There were no specific references to any project," he added.

Lim had reportedly called for voters' support if they want more development in Cameron Highlands.

The Coalition for Free and Fair Elections (Bersih 2.0) subsequently said the DAP secretary general's remarks were akin to discrimination against opposition constituencies.