Samurai bonds provide many benefits for Malaysia, says Dr M

Prime Minister Dr Mahathir Mohamad says the bonds can be used to help finance Malaysia’s projects. (Bernama pic)

TOKYO: Prime Minister Dr Mahathir Mohamad said the offer to guarantee the Samurai bonds issued by the Japanese government to Malaysia will provide many benefits to the country especially in reducing its financial burden and for its development.

He said the cheapest bond with an indicative coupon rate of 0.65% was favourable compared with the old debts which were pegged at a high-interest rate of up to 7%.

“If we could change from high interest to low interest (rate), we are able to reduce the country’s burden to service the loan. The bonds can be used for whatever projects that we have,” he told Malaysian media here on the last day of his three-day working visit to Japan.

Mahathir said there were two types of loans from Japan, including the Samurai bonds, which would be guaranteed by a Japanese banking institution.

“They also have ODA (official development assistance)… that will also help if we have specific projects. If we get the ODA assistance… the loans are charged low-interest rate, may be 1% to 1.5% or less,” he said.

The Japanese government has offered to guarantee up to 200 billion yen (RM7.4 billion) of Samurai bonds with a 10-year tenure.

The yen-denominated bonds will be guaranteed by the Japan Bank of International Cooperation at an indicative coupon rate of 0.65% and are expected to be issued before March next year.

Malaysia has voiced its interest to secure the yen-denominated loans during the first meeting between Mahathir and Japanese Prime Minister Shinzo Abe in June this year as part of efforts to address the country’s debt woes.