KUALA LUMPUR: Malaysia has hired banks for the country’s first Samurai bond sale in three decades, adding to a flood of yen-denominated debt offerings by global borrowers tapping cheap funds in Japan.
The sale would be Prime Minister Tun Dr Mahathir Mohamad’s debut global debt sale since returning to power in May and embarking on spending cuts aimed at reining in the budget deficit.
Plans for the Samurai sale started from at least June, when Dr Mahathir picked Japan for his first overseas visit as prime minister and asked his counterpart Shinzo Abe for yen-denominated credit.
The Southeast Asian nation picked arrangers including HSBC Holdings Plc, Mizuho Financial Group Inc. and Nomura Holdings Inc. for the offering, which could raise about 200 billion yen ($1.9 billion), according to people familiar with the matter.
It aims to sell the notes in the first quarter, one of the people said, asking not to be identified because the information is private.
Borrowers around the globe have increasingly turned to Japan’s debt market to raise funds, as the Bank of Japan keeps interest rates near zero even as other central banks have hiked.
Issuance of Samurai bonds has surged 139 percent in the current fiscal year, according to data compiled by Bloomberg.
Most of the proceeds from Malaysia’s bond sale will be used to repay “costly loans,” Mahathir said in November, adding that there may be “other loans” from Japan that will carry low interest rates.
The planned 10-year yen bond offer will be guaranteed by Japan Bank of International Cooperation with the coupon rate set at 0.65 percent, Finance Minister Lim Guan Eng said in November.
Neighboring Philippines priced its similar bonds at 0.99 percent when it sold Samurai notes in August. - Bloomberg