Malaysia Weighs Return to European Bond Markets

(Bloomberg) -- 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 a Wednesday interview in Singapore. “Importantly, is it better for the economy? Is it cheaper?”

The Southeast Asian nation made its return to the Japanese debt market in March with a 200 billion yen ($1.83 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 neighboring Indonesia, the only Asian nation to sell such debt last year, and Philippines, which priced euro notes in May for the first time since in 13 years.

Borrowing costs would be a 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 ($837 million) 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.

Malaysia was in talks with China as recently as February for a possible fundraising in the form of Panda bonds, Finance Minister Lim Guan Eng said at the time. Lim saw the offer from China as a positive sign of foreign investors’ interest.

To contact the reporter on this story: Michelle Jamrisko in Singapore at mjamrisko@bloomberg.net

To contact the editors responsible for this story: Yudith Ho at yho35@bloomberg.net, ;Nasreen Seria at nseria@bloomberg.net, Beth Thomas

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