When the Bank of Japan embarked on two years of official stimulus last spring — part of prime minister Shinzo Abe's scheme to rejuvenate the Japanese economy — many market participants anticipated a rush of bond buying.
Wiser heads realised that the true effects of the scheme would take time to be revealed, not least because the BoJ announced the scheme right on the cusp of a new financial year, forcing Japanese institutions to redraw and re-approve plans for the coming year.
Since then the stimulus story of the US Federal Reserve has been the big noise on the QE scene. But there are signs that Abenomics might finally be having some effect on capital flows in the SSA bond market.
Mexico has already priced a triple tranche Samurai this week, and Tunisia is set to follow. Meanwhile, Kangaroo market bankers expect to keep busy this summer after Rentenbank and Kommunalbanken both launched deals this week.
Mexico's deal matters because it was sold almost exclusively into Japan. That is a far cry from last year's deal which ended up with a rather more international book. The Kangaroo deals have also been aimed at Australian accounts.
Japanese bond buyers, as a result of an influx of official money, are being forced into looking for higher yielding assets. That is materialising in the form of Samurai bonds from issuers further down the credit curve and long dated issuance from popular SSA names in the Kangaroo market.
Given the length and size of the BoJ's programme, it seems that this is only the start of the wave of Japanese money looking for a home in international capital markets. SSA borrowers are more than well placed to take advantage of these capital outflows and have a chance of raising serious amounts of arbitrage funding.
But Japanese investors are a hard bunch to get in with. To win their investment takes time and effort. Issuers would be unwise to ignore the early signs that the Japanese market is about to offer a bigger than ever chance to borrow at low rates for a long time.
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