Finance Minister Ibrahim Ameer has stated that the government will be selling US$ 300 million as a Samurai treasury bond to Japan to compensate for the 2020 budget deficit.
With a projected income of MVR 29.92, the government proposed a budget of MVR 37.5 billion for next year, leaving the archipelago with a budget deficit of MVR 5.7 billion.
Speaking on Sunday at the Parliament’s budget review panel, Minister Ameer said that by selling T-bills, the additional MVR 563 million required to make up the deficit will be generated.
In this respect, the government will be selling bonds to Japan, said the minister. A Samurai bond is a yen-denominated bond issued in Tokyo by non-Japanese companies.
“Work is ongoing [to sell the bonds]. This is a Samurai bond being sold to the Japanese market. We are getting better rates than we did earlier,” said the minister.
The minister said the bond interest rate was 0.75%. With the introduction of guarantee fees and management fees, this amount is subject to minor changes, the minister added.
The minister also explained that the bond was classified into three tranches of US$ 100 million each. A tranche is one of several associated securities issued in the same trade.
“We will be placing US$ 300 million simultaneously. However, it will be placed as three tranches, maturing in 8, 9, and 10 years respectively. Therefore, there will be three tranches of US$ 100 million”, said the minister.