Japan

Although the dynamics of the basis swap can make the yen market a volatile source of funding for international borrowers, the arguments for accessing it are compelling.

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.

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.

Despite disappointing volumes this year, from both a supply and a demand standpoint, the arguments for issuing in Pro-Bond format are as relevant as they have ever been and the longer‑term outlook for the market remains healthy. TLAC and MREL capital issuance could be particularly heavy — and lucrative.

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.

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.

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.