Historic breakthrough! Japan's issuance of dollar and euro bonds is sprinting towards the USD 100 billion mark
Japanese issuers are expected to see the issuance scale of bonds denominated in US dollars and euros surpass USD 100 billion for the first time this year, driving the total issuance close to historic numbers. Multiple companies are focusing on entering the primary bond market, which is expected to become one of the busiest trading weeks in the global bond market. Driven by merger and acquisition activities, foreign currency capital expenditure demands, and investments in new technologies, the offshore bond issuance volume of Japanese companies has significantly increased. So far this year, a total of USD 93 billion has been issued, a 67% increase compared to the same period last year
According to Zhitong Finance APP, the issuance scale of bonds denominated in US dollars and euros by Japanese issuers is expected to surpass USD 100 billion for the first time this year. On Tuesday, several Japanese companies concentrated their efforts in the primary bond market, pushing the total issuance volume close to this historic figure.
This week's bond issuance wave, led by at least seven financial institutions including Nomura (NMR.US) and Mitsubishi UFJ Financial Group (MUFG.US), is expected to become one of the busiest trading weeks in the global bond market this year.
Daniel Kim, Co-Head of Asia-Pacific Debt Capital Markets at HSBC Holdings, stated: "Driven by increased M&A activity, significant foreign currency capital expenditure demands, and investments in new technology fields such as artificial intelligence (AI) and data centers, we are seeing a substantial increase in offshore bond issuance by Japanese companies." He also pointed out that the refinancing needs of issuers are an important driving factor.
Currently, strong corporate fundamentals and renewed optimism about the economic outlook are boosting market risk appetite. As the US dollar bond market is experiencing one of the lowest yield premiums in decades, global companies are rushing to issue bonds to lock in favorable financing costs. Against this backdrop, Japanese companies are increasingly utilizing their balance sheets to engage in domestic and international M&A activities. In July of this year, Japanese telecom giant Nippon Telegraph and Telephone (NTTYY.US) issued USD 17.7 billion in US dollar and euro bonds, setting a record for the largest issuance of such bonds in the Asia-Pacific region, with the proceeds used for refinancing a bridge loan for an acquisition deal.
Compilation data shows that since the beginning of this year, Japanese issuers have cumulatively issued USD 93 billion in US dollar and euro bonds, a 67% increase compared to the same period last year. The data also indicates that the previous annual bond issuance record for Japanese issuers was approximately USD 98 billion.
It is noteworthy that on Tuesday, it was not only Japanese companies planning to issue US dollar bonds; the State Bank of India and HSBC (HSBC.US) are also advancing their bond issuance efforts
