The Japan Bank for International Cooperation (JBIC) has provided a guarantee for a ringgit or Malaysian dollar denominated bond issued by Orix Leasing Malaysia Berhad (OLM).

OLM is a Malaysian equipment leasing company that finances the acquisition of vast range of movable assets, such as automation equipment, computers, manufacturing and construction equipment. The company was established as a leasing joint-venture with Orix Corporation of Japan, which still retains an equity stake in the company. The corporate bond is for RM200mn (US$59mn) and has been issued by OLM, with a guarantee from Japan’s Orix Corporation, and a secondary guarantee provided by JBIC, and a Malaysian branch of Bank of Tokyo-Mitsubishi UFJ, based in Labuan, the financial centre of Malaysia.

The proceeds of the bond will be used for OLM’s leasing activities and other business involving Japanese products.

This is the second bond issue by OLM in the Malaysian capital market with a JBIC guarantee facility. The first issue was made in January 2006.

OLM is using ringgit-denominated bond to diversify the range of financing instruments at its disposal.

However, the Asian bond markets are still at an early stage of development, which means JBIC has decided to step in and offer forms of credit enhancement to bond issuances. The Japanese agency is very active in the Asian bond market initiative (ABMI) which was proposed by the government of Japan in December 2002, a scheme aimed at developing the Asian bond markets.