Record international bond sales are helping Japanese borrowers bolster their firepower for overseas operations and acquisitions.
Companies and government entities issued an unprecedented US$86.7 billion of foreign-currency notes last year, up 21.4 percent from 2016, as firms including Softbank Group Corp and Asahi Group Holdings Ltd tapped debt financing to expand overseas.
Sales this month are also off to their strongest start in seven years, data compiled by Bloomberg showed.
“Overseas bond issuance means that Japanese companies have an extra financing tool to use when implementing growth strategies, including mergers and acquisitions,” said Masaya Mizobuchi, head of global debt capital markets at Mizuho Securities Co. “It may also help Japanese issuers gain more recognition overseas.”
While Japanese overseas mergers and acquisitions slowed last year, any further gains in the yen could burnish the appeal of international deals.
Corporate Japan is also locking in some of the lowest borrowing costs in foreign currencies in more than a decade, ahead of expected central bank interest rate increases.
The extra yield on corporate debt in the US over Treasuries has slid to an 11-year low of 87 basis points, according to the Bloomberg Barclays index.
For now, market conditions are likely to remain favorable for Japanese companies looking to sell US dollar notes, said Mana Nakazora, chief credit analyst in Tokyo at BNP Paribas SA.
The lack of further strength in US economic growth means that it would be “difficult” for yields on 10-year Treasuries to rise to 3 percent from the current levels of about 2.7 percent, she said.
Investors would likely keep buying other investments offering higher returns, including corporate bonds, and that should hold down issuance costs for companies, she added.
Foreign debt sales by Japanese firms are likely to increase this year, said Minoru Shinohara, global head of investment banking at Nomura Holdings Inc.
“Japanese companies have been expanding their overseas operations — they have a very strong demand for foreign currencies,” he said.
They appear to have a “strong view” that they should issue bonds before long-term US interest rates begin to rise, said Ryota Suzuki, managing director at Bank of America Merrill Lynch in Tokyo.
Japanese companies that have not issued foreign currency notes for a while or have never done so have started to indicate more interest as they watch other firms successfully sell debt abroad, according to Masanori Kato, head of debt capital markets in Tokyo at JPMorgan Securities Japan Co.
JPMorgan was the top underwriter last year of foreign bonds sold by Japanese firms, according to Bloomberg-compiled data.
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li
Dutch brewing company Heineken NV on Friday announced an investment of NT$13.5 billion (US$414.62 million) over the next five years in Taiwan. The first multinational brewing company to operate in Taiwan, Heineken made the statement at a ceremony held at its brewery in Pingtung County. It also outlined its efforts to make the brewery “net zero” by 2030. Heineken has been in the Taiwanese market for 20 years, Heineken Taiwan managing director Jeff Wu (吳建甫) said. With strong support from local consumers, the Dutch brewery decided to transition from sales to manufacturing in the country, Wu said. Heineken assumed majority ownership and management rights
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI