The Ministry of Finance is preparing a new round of samurai bond issuance, hoping the move will boost the budget’s bottom line and lead to further investment from Japan.
Samurai bonds are a yen-denominated bond issued in Tokyo by non-Japanese companies which are still subjected to Japanese regulations. The bonds provide the issuer with access to Japanese capital and can be used for local investment, as well as financing operations outside of Japan.
The Indonesian government is set to issue a new batch of the bonds, worth ¥100 billion (US$905.77 million), on Thursday, June 8. Mizuho Securities, Nomura Securities and SMBC Nikko Securities will arrange the issuance.
The Samurai Bonds will come in several serieses with various tenors. The Samurai Bonds will come in several serieses with various tenors. The RIJPY0620 is a three year tenor worth ¥40 billion (US$362.31 million) and 0.65 percent coupon. The RIPJPY0622 is a five year tenor worth ¥50 billion (US$452.88 million) and 0.89 percent coupon, while the RIJPY0624 has a seven year tenor, is worth ¥10 billion (US$90.57million) and 1.04 percent coupon. The three were ranked Baa3 from Moody’s, BBB- from Fitch and Japan’s R&I gave the serieses a BBB- rating.
Under the 2002 law on Conventional Based Government Securities, the government will issues the bonds under a public offering format as opposed to the previous private placement.
The Directorate General of Financing and Risk Management at the Finance Ministry said this will be the first time the government issues a samurai bond with a seven year tenor.
The issuance is likely to prove popular, with double the demand of the most recent issuance in June 2016. Life insurers, banks, asset managers and other financial institutions took part last year.
The Indonesian government believes that along with raising positive sentiment among Japanese investors, the upcoming issuance will increase confidence among global investors.
The Conventional Based Government Securities is one source of state budget deficit funding. It is hoped the issuance will benefit the state budget.
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