Finance Minister Ibrahim Ameer has stated that the government will be selling US$ 300 million as Samurai treasury bond to Japan to compensate for the 2020 budget deficit.
The government proposed a budget MVR 37.5 billion for next year with an estimated revenue of MVR 29.92, leaving the archipelago with a budget deficit of MVR 5.7 billion.
Speaking at the Parliament's budget research committee on Sunday, Minister Ameer said the additional MVR 563 million required to make up the deficit will be raised through the sale of T-bills.
In this regard, 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 interest rate on the bond is 0.75%. This percentage is subject to small changes with the addition of guarantee fees and management fees, said the minister.
The minister further said the bond is divided into three tranches of US$ 100 million each. A tranche is one of a number of related securities offered as part of the same transaction
"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.
Finance Minister Ibrahim Ameer
