Positive response to sovereign bond offering



NEW YORK: Investors are responding positively to Malaysia's sovereign bond offering as the global bond roadshow, led by First Finance Minister Tun Daim Zainuddin, reaches its final leg here.

Wilma Davis, Second Vice President of John Haneock Mutual Life Insurance Company in Boston, Who attended a roadshow, said that she was impressed with the economic recovery in emerging markets and wanted to know more about Malaysia's credit story.

Fifteen investors including those from Aetna, Scudder, Fidelity, and Loomis Sayles, attended the roadshow in Boston on Monday.

The roadshow is to promote the proposed US$2 billion bond offering, which is lead-managed by Salomon Smith Barney.

After travelling eight days covering Hong Kong, Tokyo, Milan, Frankfurt, and key US cities including Chicago, Boston, Hartford, to promote the bond, the three teams are finally converging in New York.

In New York more talks were held with investors later yesterday before the launching and pricing of the bond scheduled for today and Thursday.

An industry analyst who has been closely monitoring the roadshow noted that investors seemed excited about Malaysia's credit story and impressed with its credible reforms.

He said that the breathing space provided by the imposition of selective capital controls had been used extremely well and reforms appear to be taking root.

"I see a turnaround in growth and Malaysia looks poised to recover ahead of its neighbours," he said.

Standard & Poor's has rated Malaysia's foreign currency debt at triple-B minus while Moody's Investor's Service ranks Malaysia's rating at Ba1.

Managing Director of the International Monetary Fund, Michel Camdessus said in Seoul on Thursday that countries in the region were close to or even past the turning point.

"Most clearly in South Korea, the Philippines, and increasingly in Thailand and Malaysia, we see signs of an upturn in activity," he said.SG Global Research, a unit of French bank Societe Generale, reported that "the outlook remains positive with faster and sharper than expected economic recovery across the region, rising earnings estimates, continuing corporate restructuring and global portfoho inflows."

However, regional markets are worrying about a possible interest rate increase in the US and its implication for Asia after the Federal Reserve Chairman, Alan Greenspan, warned last Tuesday of a slight in its bias towards a tighter monetary policy, the research unit said.

A market watcher here said, Greenspan comments had "spooked" the markets by leaning towards raising interest rates.

There were concerns that spreads on bonds, especially emerging bonds, had widened.

Investors, however, were showing keen interest in Malaysia's bond offering, "but they're also concerned about the market condition in general," he added.

Malaysia called off a bond issue last year after international rating agencies downgraded its credit rating.

Under such circumtances, Malaysia would have had to pay high interest rates, at around 15 per cent. -- Bernama

Arcticle extracted from New Straits Times, Malaysia



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