Overseas issuers issued yen bonds at the fastest pace in five years as they seek cheap capital ahead of an expected rate hike by the Bank of Japan.
Lloyds Banking Group Plc priced ¥33.9 billion ($216 million) of Samurai notes on Friday, joining KKR & Co. and Deutsche Bank AG in issuing yen debt this week. That pushed up total sales of the bonds to ¥477.3 billion, the highest since 2019 for the month of May, according to data compiled by Bloomberg.
Sales of yen bonds have been brisk as borrowing costs head higher in Japan, with the 10-year government debt yield climbing above 1% this week for the first time since 2012.
Selling of yen-denominated bonds has been brisk as borrowing costs rise in Japan, with the yield on 10-year government debt climbing above 1 percent this week for the first time since 2012.
While that’s low compared with equivalent yields such as 4.47% for US 10-year Treasuries, borrowers want to get yen funds before debt costs rise too much. For Japanese investors, yen notes issued by overseas companies often offer a premium to local corporate bonds.
Yen-denominated bonds issued by foreign companies have offered a 1.46 percent coupon on average since the start of 2024. Japanese corporate bonds yielded 1.096 percent, according to data compiled by Bloomberg.
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