Japan

International investors are recognising the progress that Abenomics has made in turning around Japan’s recently moribund economy. The long-awaited acceleration in domestic demand is finally taking place, while business confidence is high. But can this progress be maintained while inflation and government finances remain weak and North Korea pushes the region towards conflict?

Japan’s banks have passed the stability test. Now their challenge is to build up profits — a difficult task when considering negative interest rates and ultra-thin lending margins.

Japan’s borrowers have been slow to board the SRI train. However, this is beginning to change, thanks to committed issuers such as the Tokyo Metropolitan Government, the Development Bank of Japan and the Japan International Cooperation Agency.

Japanese retail investors have been keen buyers of ‘themed’ or ESG (environmental, social and governance) bonds for many years, and institutional investor appetite for green or socially responsible issuance is now growing rapidly. This is creating a wealth of opportunities for international and local issuers in the ESG market. A multinational panel of issuers in the global and Japanese capital market gathered to discuss the prospects for increased Japanese investor demand in this fast-expanding area.

While Japan remains the world’s largest creditor, its investors are not making much of an impact in the euro and dollar SSA bond markets. Instead, they are making their presence felt in Australian dollars and, as ever, the Uridashi market.

On Monday, Japanese brewer Asahi Group brought the fourth European bond issue by a beer producer in Europe in 2017, having roadshowed its debut euro bond the previous week.

Japanese telecoms company SoftBank has done it again. On Tuesday, it replicated its 2015 success of a €4.5bn bond issued outside of the US high yield market with a new €4.75bn issue.

On Monday, Japanese brewer Asahi Group brought the fourth European bond issue by a beer producer in Europe in 2017. The €1.2bn dual tranche offering was the largest of four new issues in the euro corporate bond market, all of which were rated triple-B and paid double digit new issue premiums.

SoftBank, the Japanese telecoms and technology group, received the highest speculative grade ratings for its potential new bond deal on Friday. It will aim at repeating its notable success in the European high yield market in 2015

UBS has hired a handful of senior bankers for its Japanese equity and fixed income units from Mizuho and other rivals, boosting its bench strength amid growth in client activity and deal flow.

ANZ has hired Hodaka Shoji as head of specialised finance for Japan, wooing him from Mizuho AsiaInfra Capital (MAIC) in Singapore.

Public sector issuers navigated a choppy start to the week to print strong dollar trades, but some SSA bankers worry that the problems that brought that early volatility are far from resolved.