Malaysia said to ask Japanese banks for Samurai bond pitches

KUALA LUMPUR (Nov 22): Malaysia has asked banks to submit pitches to help with a potential Samurai bond sale, less than a year after selling its first yen-denominated debt in three decades, according to people with knowledge of the matter.

The Southeast Asian nation invited Daiwa Securities Group Inc, Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc, Nomura Holdings Inc and Sumitomo Mitsui Financial Group Inc to present proposals in a so-called beauty parade in October, said the people, asking not to be named as the information is private. The size and tenor of the planned offering haven’t been decided, according to the people.

Discussions are still early and may not result in a deal, the people said. A finance ministry representative declined to comment on the matter.

The move shows that Malaysia is on track to sell Samurai bonds in the first quarter of next year as planned. Prime Minister Tun Dr Mahathir Mohamad is making use of his close link to Japan, the country he has visited the most since returning to power last year, while seeking lower borrowing costs to fund the fiscal deficit.

The government sold 200 billion yen (US$1.8 billion) of 10-year bonds at a coupon of 0.53% in March, which came with a guarantee from the Japan Bank of International Cooperation. Its similar-maturity local-currency bonds have a yield of 3.40%. The ringgit has weakened 4.4% against the yen since the Samurai notes were sold in March.

Malaysia’s debt holds the fourth-lowest investment grade at Fitch Ratings, S&P Global Ratings and Moody’s Investors Service, and is one step higher at A at Japan’s Rating & Investment Information Inc.

Source: TheEdgeMarkets