Malaysia weighs bids for return to Europe bond market

Muhammed Abdul Khalid, the economic adviser to Prime Minister Mahathir Mohamad. (Facebook pic)

SINGAPORE: Malaysia is considering proposals from banks for a possible return to European bond markets after a hiatus of well over a decade.

The country has received offers from quite a lot of lenders proposing to help it raise funds in euros or Swiss francs, according to Muhammed Abdul Khalid, the economic adviser to Prime Minister Mahathir Mohamad.

The last time Malaysia sold euro-denominated debt was in 2005, while its most recent Swiss franc offer was in 1998, according to data compiled by Bloomberg.

“There are proposals. We are looking at what’s best for the country,” Muhammed said in an interview in Singapore.

“Importantly, is it better for the economy? Is it cheaper?”

Malaysia made its return to the Japanese debt market in March with a 200 billion yen (RM7.68 billion) offering, its first Samurai bonds since 1999.

If Malaysia goes through with a euro-denominated debt sale, it would follow in the footsteps of neighbouring Indonesia, the only Asian nation to sell such debts last year, and the Philippines, which priced euro notes in May for the first time since in 13 years.

Borrowing costs would be the main consideration, the economic adviser added.

The total cost of Malaysia’s recent yen bond issuance was 0.63%, helped by a guarantee by Japan Bank of International Cooperation.

The Philippines locked in a rate of 70 basis points above mid-swaps for its 750 million euro (RM3.5 billion) offering, which narrowed as much as 30 basis points from the initial price target range.

Malaysia’s credit rating is two ranks higher than the Philippines at Moody’s Investors Service and Fitch Ratings, and one step higher at Standard and Poor’s.