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Guarantee for Samurai Bonds Issued by the Republic of Indonesia
Supporting the country’s funding efforts in the bond market

  • Region: Asia
  • Others
  • Guarantees
NR/2009-20
July 27, 2009
  1. The Japan Bank for International Cooperation (JBIC; President & CEO: Hiroshi Watanabe)*1 signed on July 24 a set of agreements to provide a guarantee for yen-denominated foreign bonds (Samurai bonds)*2  issued by the Government of the Republic of Indonesia (GOI).  This issuance is a private placement denominated in Japanese yen totaling ¥35 billion, with JBIC providing a guarantee for the principal and part of the interest.  Participants in this issuance include Nomura Securities Co., Ltd., Daiwa Securities SMBC Co. Ltd. and Mitsubishi UFJ Securities Co., Ltd. as joint lead arrangers, as well as Sumitomo Mitsui Banking Corporation as bond administrator. 
     
  2. In February 2009, the Government of Japan and the GOI reached a basic agreement setting out that Japan will provide financial support to the GOI in the aggregate amount of Japanese yen equivalent to up to US$1.5 billion through: (1) a guarantee for Samurai bonds; and (2) a contingent loan facility through collaboration with the World Bank and Indonesia's other development partners.*3  In April 2009, JBIC signed a program agreement with the GOI to implement this financial support.  This issuance will be the first bond issue based on this support program and also the first Samurai bond issuance by the GOI.
     
  3. The provision of a guarantee by JBIC is intended to support the GOI's funding efforts in the Japanese bond market which will diversify the GOI's funding sources, thereby contributing to the stable economic growth of Indonesia and eventually of the Asian region.  It is also expected to activate the Samurai bond market through the offering of a new investment product.
     
  4. To enhance this support for Samurai bond issuance to other Asian developing countries, the Government of Japan announced the Market Access Support Facility (MASF)*4 in May 2009.  Specifically, the MASF will provide guarantees totaling up to ¥500 billion for Samurai bonds issued by Asian developing countries.  JBIC will continue supporting Samurai bond issuance by Asian countries, based on requests from individual countries. 
Note
  1. *1 JBIC is the international wing of the Japan Finance Corporation (JFC; Governor: Shosaku Yasui).
  2. *2 Samurai bonds are yen-denominated bonds issued in Tokyo by a foreign government or company.
  3. *3 See information dated February 23, 2009 and the Press Release dated April 7, 2009.
  4. *4 See information dated May 18, 2009.
  5.  

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