Japanese Firms Surge into Global Bond market, Raising ¥20 Trillion in Foreign Debt
TOKYO – Japanese companies have dramatically increased their issuance of foreign currency-denominated bonds this year, raising approximately ¥20 trillion ($17.7 billion equivalent in july alone) – teh largest amount ever for Asian companies. this surge is reshaping global credit markets adn reflects a broader trend of corporate governance reform and strategic acquisitions within Japan.
The largest single deal this year came from NTT, issuing a combined $17.7 billion in dollar and euro-denominated bonds. Proceeds from this issuance were used to acquire full ownership of NTT Data Group.
This activity is occurring alongside a important increase in overall Japanese corporate acquisitions, totaling $262 billion year-to-date – 2.3 times the value recorded during the same period last year. This includes investments in artificial intelligence by NTT Data and SoftBank G, which recently acquired ABB’s robotics business for approximately ¥820 billion.
The Tokyo Stock Exchange and activist shareholders are pushing listed companies to improve capital and management efficiency, driving the demand for overseas funding. Securities firms are responding by bolstering their foreign bond teams to meet growing client demand. Kazuhiro Yamauchi, head of global capital market promotion at Mizuho Securities, noted, ”We are receiving an increasing number of inquiries from companies that had no interest in issuing foreign bonds until now.”
Japanese companies now account for roughly 30% of all dollar and euro-denominated bonds issued in the Asia-Pacific region, up from 18% five years ago. Conversely, the share of Chinese and Hong Kong issuers has fallen from 49% in 2020 to 24% currently.
The high creditworthiness of Japanese issuers is also attracting investors. Over 70% of Japanese companies’ foreign currency bonds are rated A or higher, contributing to a higher average rating for the asian dollar bond market. PineBridge Investments co-head of Asian fixed income, Omar Slim, stated, “The diversity of Japanese companies is attractive,” adding that Japan is “an indispensable investment destination for Asian investors.”
Deutsche Bank‘s head of Asia-Pacific credit analysis, Owen gallimore, emphasized the importance of investment-grade bonds, stating, “Investment-grade bonds are always at the heart of any healthy credit market,” and that Asian bond markets “are in much better shape, with more depth and breadth.”
