Japan

Japan’s top issuers occupy a unique part of Asia’s bond market landscape. They are well-regarded enough — and rated highly enough — that moments of fear in the credit markets can lead to more demand for their deals, rather than less. They face a domestic bond market defined by negative interest rates, an investor base that is ultra-sensitive to movements in the swap rate and an expectation from the government that their funding costs will remain tight.

The yen bond market, for all its vibrancy, cannot contain Japan’s ambitious issuers. Banks and corporates are building on efforts to woo dollar and euro investors as they thirst for new sources of funding, writes Morgan Davis

SNK Corp is set to launch an IPO using depository receipts (DRs) on the Korea Exchange next month. It is eyeing up to W169.7bn ($149.7m) in proceeds, according to a term sheet seen by GlobalCapital Asia.

The Japanese Financial Services Agency (JFSA) published risk retention rules on Friday that allow Japanese investors to avoid capital charges even if they buy debt from non-risk retention compliant deals.

Barclays has prepared new issuance in Japan while it waits out this week’s Brexit drama. The yen market is proving popular among European banks, which are taking advantage of favourable conditions to make total loss-absorbing capacity (TLAC) issuance.

Several CLO issuers in the US and Europe have come to depend on Japanese investors to anchor triple-A tranches, but observers say Japan’s banks may no longer be able to soak up foreign paper if a bubbling banking crisis forces banks to clean up their act at home.

Malaysia has closed the biggest sovereign Samurai bond in 18 years, raising ¥200bn ($1.79bn) from what could be just the first of many such deals to come.

Rating: A1/A+

Dollar SSA issuance is expected to pick up next week, thanks to a change in the euro/dollar basis swap that is making issuance in the currency more attractive for euro funders. There was still a smattering of dollar trades this week, including a Sofr-linked floater that broke new ground for the format.

Charles Pitts-Tucker has been promoted to international head of investment banking at Nomura, alongside a string of other moves at the Japanese bank.

Crédit Agricole put out price thoughts for a non-preferred senior bond in the Euroyen market on Wednesday, getting the ball rolling on its third public debt offering in the space of a week.

The anchoring of European CLOs by Japanese investors, one of which has been claiming the senior notes on most euro CLOs issued in 2019, is likely to continue until at least mid-April, despite the year end for Japanese banks at the end of March, which often slows the market. ICG is the latest manager to launch an issue, with Goldman leading the deal.