Malaysia’s oil-rich state of Terengganu plans to raise M$5bn ($1.4bn) with a bond issue guaranteed by the federal government this week to help finance its new M$11bn sovereign wealth fund.

The move comes as international investors show increasing appetite for sovereign bond issues by Asian governments. Indonesia completed a $3bn bond issue in February – the biggest outside Japan since 2003 – with demand for the bonds reaching almost $7.25bn.