JBIC eyes more Samurai bond guarantees

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The Japan Bank for International Cooperation is considering providing guarantees for more Samurai bonds being contemplated by countries like Vietnam, Romania and Uruguay, a senior JBIC official told Reuters.

JBIC, a state-backed agency, has been providing such guarantees to support sales of Samurai bonds by Indonesia, Mexico, Columbia and the Philippines, which have been seeking to raise cash to meet their financing needs and diversity funding sources and currency exposure.

Toyoaki Fujita, head of JBIC's Policy and Strategy Department for Financial Operations, said the institution was also considering guaranteeing Samurai bonds planned by government-backed agencies such as Asian export-import banks.

Samurai are yen-denominated bonds issued in Japan by non-Japanese entities.

The Philippines on Tuesday sold 100 billion yen ($1.1 billion) of Samurai bonds to help plug its budget deficit this year, with a partial guarantee from the JBIC for up to 95 percent of the bonds.

"From now on, we are looking at the second round of Samurai bond sales by Indonesia, as well as Vietnam, Turkey, Romania, and Uruguay," Fujita said on Tuesday.

"And we are not just looking at sovereign bonds. We are also mulling providing guarantees on Samurai bonds being considered by entities like Asian export-import banks," he added.

This year, Indonesia is now looking to sell up to $1.1 billion in Samurai bonds at the end of April, while Turkey is also planning a yen bond sale.

Fujita said support for Samurai bonds issuance by JBIC, the international arm of state-owned bank Japan Finance Corp, has helped revitalize Tokyo markets and raise their competitiveness.

"The investor base is growing more than we had expected," Fujita said. "We will keep providing guarantees for a while, probably the next 1-2 years, but we hope to foster a Samurai bond market that does not need our guarantee in the future."

Source: Reuters

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