Japanese companies, returning from a summer lull in corporate bond deals, face the highest funding costs in five months. That is not holding back issuance.
Sony Corp on Wednesday said it is planning its first non-convertible bond sale in three years, after an earlier announcement by Panasonic Corp that it is looking to sell as much as ¥400 billion (US$4 billion) in debt.
BONDS
The average yield on yen corporate bonds was 0.24 percent on Wednesday, near the highest since March, and up from a low of 0.096 percent last month, according to Bank of America Merrill Lynch indexes.
The Bank of Japan (BOJ) is undertaking a review of its policy measures ahead of its next meeting on Saturday and Sunday, and some companies might prefer to issue before then given uncertainty about how market rates might respond, Mizuho Securities Co chief credit strategist in Tokyo Hidetoshi Ohashi said.
While only two firms have sold bonds so far this month, more than two dozen companies, including utilities and railway operators, have announced plans to sell debt in the next two weeks.
“Nobody really knows what will be in the BOJ’s review that’s coming in September and there is a possibility it could be a further catalyst that pushes up interest rates,” Ohashi said. “For issuers who think that, there is an incentive to sell ahead.”
Given current low bond market yields and a decline in volatility since the start of the month, issuers will probably be willing to pay investors a little more to buy their debt, Ohashi said.
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