Malaysia is proving to be a shrewd player in the international financial markets. By all the rules of the game, the political and financial scandals of the past year, as well as the bleak outlook of the economy, should have left the country paying over the odds for its new borrowings.
Yet Kuala Lumpur has just managed to outwit and outrage the region's bankers by engineering what seem to be highly generous terms on a black-door loan from Japanese leasing companies. The proposed transaction, which is technically a leasing deal, effectively gives Malaysia 30 Yen billion loan for 20 years at the finest spreads.
Details of the arrangement were leaked in late May, taking Japanese bankers by surprise. They had been negotiating, and at one stage were quite confident of clinching, a syndicated yen loan with Malaysia for the same amount.
If the news was meant to shape up the bankers and show them that Malaysia had other options, it succeeded. They had been hopeful of persuading Malaysia's Treasury that it could not expect much more than a 15-year loan with a premium -- one banker in Kuala Lumpur suggested 0.3% -- over the rate it would have commanded in the days when its paper was the toast of the lending community.