Rejuvenated Samurai spring into action
The Samurai market is back, after being knocked sideways by bank defaults in 2008. There have been a string of important deals from a wide range of borrowers. However, costly and time-consuming red tape continues to hinder its progress.
Traumatised during the financial crisis by defaults from previously well regarded borrowers, the Samurai market emerged from intensive care towards the end of 2008, began walking more confidently in 2009 and has been galloping forward in recent months.
With the sour memories of the defaults in 2008 by Lehman Brothers and Kaupthing Bank rapidly receding, the Samurai market enjoyed its best year since the mid-1990s in calendar 2010. According to Dealogic data, issuance volumes in 2010 rose by 37% to $22.9bn in 33 deals, which was the highest level since the $34.2bn posted in 1996. Issuers from the UK accounted for 18.6% of 2010s total, up from 10.9% in 2009, followed by Australia, with a 16.3% share.
Issuance volumes in 2010, which then remained buoyant in the early part of calendar 2011, were underpinned by continued ultra-low yields in Japan, which kept rates for domestic issuers compressed and allowed foreign issuers to offer the magical combination of diversification and irresistible spreads.
"One of the factors that drove rising volumes in the Samurai market was the over-concentration of investors toward domestic credits, which pushed spreads in much too far," says Kenji Setogawa, a director at Barclays Capital in Tokyo. "Japanese banks, for example, were trading in 2010 at around JGBs plus 10bp, which is extremely tight by global standards."
At the same time, welcoming market conditions gave overseas borrowers the chance to build on their strategy of investor diversification by tapping into an entirely new base of institutions that they would not encounter in other currency markets.
Local bankers say, however, that over the last year a more important feature of the market than issuance volumes was the increased diversity of the profile of borrowers that were able to access the Samurai market, with lower rated bank and corporate borrowers getting an increasingly warm welcome from Japanese investors.
One self-contained area of the Samurai sector that continued to flourish and expand in 2010 was the market for deals guaranteed by the government via Japan Bank for International Cooperation (JBIC). Although it was trumped by a ¥180bn trade for Turkey in March 2011, the largest individual transaction of the calendar year in the Samurai market as a whole was Mexicos ¥150bn 10 year JBIC-guaranteed deal in October. This was priced at 50bp over yen Libor, compared with 80bp over for a transaction of the same size from Mexico the previous December.
As with the broader Samurai market, this decline in the pricing of Mexicos transactions is symptomatic of the highly sequential trends that have become conspicuous as investors have become more comfortable both with the format and with the credits coming to the market.
One of the most discernible of these trends is the steady increase in the size of bonds being accommodated in the Samurai market. When the Republic of Indonesia launched the first JBIC-guaranteed bond, in July 2009, it raised just ¥35bn, compared with the maximum of ¥75bn it had originally hoped to issue. Pricing of the 10 year deal, meanwhile, came at 135bp over yen Libor, towards the top of the 120bp-140bp guidance range, with investors clearly unnerved by the bombings at two Jakarta hotels which directly preceded the offering.
By comparison, when the Philippines came to the market in February 2010 via Daiwa Capital Markets, Mitsubishi UFJ and Nomura, a book that was twice covered allowed the borrower to print a 10 year ¥100bn deal at the bottom of its 85bp-100bp price range.
Indonesia, meanwhile, returned to the JBIC-guaranteed sector in November 2010 with another 10 year issue via Daiwa Capital Markets and Nomura, printing the ¥60bn bond at 55bp over yen Libor.
Panama keeps things moving
The three trends of diversification, increased transaction sizes and falling pricing in the market for government guaranteed Samurai bonds were all maintained in the last quarter of the Japanese fiscal year. Panama, for example, successfully launched its first JBIC-guaranteed Samurai under the ponderously-named Guarantee and Acquisition toward Tokyo Market Enhancement (GATE) scheme in January. Led by Daiwa Securities Capital Markets and Mitsubishi UFJ Morgan Stanley Securities, this was a ¥41.5bn issue which built on the trend of collapsing pricing in the Samurai market, with the bonds offered at yen swap offer side plus 48bp.
More diversification was added to the government guaranteed sector in early March when Indias Exim Bank issued its first Samurai since 2006, when it tapped the market twice, in February and October. Marchs ¥20bn issue, however, was the first transaction to take advantage of the extension of the JBIC guarantee to cover government-affiliated entities as well as sovereign borrowers.
Comfortably the most interesting newcomer to the JBIC-guaranteed segment of the market in the first quarter of calendar 2011, however, was Turkey. In March, it returned to the Japanese capital market after a 10 year absence with a ¥180bn 10 year private placement via Daiwa Capital Markets, Mitsubishi and Mizuho with a 95% guarantee from JBIC under its Gate mechanism.
The Turkish Samurai was a landmark in the markets evolution for several reasons. First, it was the largest JBIC-guaranteed deal to date and the largest single-tranche sovereign Samurai since a ¥200bn two year trade for Brazil in 2001. Its size, however, could have eclipsed that of the Brazilian bond had it not been capped by the borrower at ¥180bn. Even with this cap, the deal was still the largest single non-US dollar bond ever executed by Turkey.
The pricing of Turkeys deal also bore witness to the growing capacity of the Samurai market, with strong demand driving pricing to the tight end of its guidance range of 45bp-55bp over yen offer side swaps, with the bonds re-offered at a spread of 48bp after a two week marketing period.
Another way in which the Turkish transaction was an important stepping-stone in the growth of the Samurai market was that, as the first JBIC-guaranteed deal for an EMEA borrower, it has potentially opened up a new source of issuance from a geographical perspective.
Sceptics might argue that the comfort of the government guarantee makes the JBIC-backed deals an easy sell regardless of the credit. Bankers insist that it would be a mistake to jump to this conclusion. "One of the key points about these bonds is that only about 95% of the coupon payments are guaranteed," says Hideo Sakurai, managing director and head of capital markets at Daiwa Securities Capital Markets in Tokyo. "This is one reason why back in 2009, when the first deal was launched, Japanese investors that were new to the product had to study it in great detail."
The result was that the number of investors in first deal was very small at no more than single digits, Sakurai adds. "As the number and size of transactions has increased, we have seen a dramatic increase in the number of investors in the books. By the time of the Mexico and Indonesia deals in 2010 we were seeing as many as 30 investors in the deals."
On the supply side, meanwhile, it is easy to see why there is no shortage of borrowers stepping up to take advantage of the Japanese governments guarantee programme. Quite apart from the funding cost advantage arising from the JBIC guarantee and the depth of demand, the red tape associated with this segment of the market is less daunting than it is for unguaranteed issuers.
If the trend of increased investor confidence has been a feature of the JBIC-guaranteed sector of the Samurai market, this theme has been even more conspicuous in the much larger unguaranteed part of the market. When the market reawakened from its Lehman and Kaupthing-induced torpor in January 2009, it needed a rock-solid credit in the form of a triple-A government-guaranteed bank to tempt investors back into the market. This happened with a ¥201.3bn three-tranche government-guaranteed issue from Australias Westpac, the success of which encouraged other triple-A banks to return to the Samurai sector.
While banks continued to form the anchor of issuance in 2010, the withdrawal of government-guaranteed issuance has meant that Samurai investors have been progressively invited to step down the credit curve. They warmed to the challenge with a speed that was perhaps surprising, and have continued to do so ever since.
"Immediately post-crisis, investors were only willing to look at gold-plated credits," says Morven Jones, head of corporate debt capital markets and SSA at Nomura in London. "Today, we have a number of issuers lined up to roadshow which would not have been able to access the market two years ago."
Banks underpin supply
The bulk of these issuers are from the financial sector, which has underpinned supply for the last 12-18 months. "An important driver for the Samurai market in 2010 was issuance from double-A rated European banks paying 30bp or 40bp over yen swaps which represented a large pick-up over alternatives in the domestic market from local issuers," says Gen Nakahara, head of debt capital markets at Merrill Lynch Japan Securities. "For these issuers, the yen market has been an attractive source of funding diversification."
With a limited universe of investors active in the Samurai market, general practice is to ensure that demand is maximised by packaging individual transactions into a series of fixed and floating tranches. "Regional bank investors, for example, tend to prefer floating rate notes, which is why most transactions we sell are in two or three and sometimes even four tranches," says Hidechika Fukushima, managing director of debt capital markets at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
"But the majority of demand is usually for the fixed rate tranches," he adds. "For example, if you look at the transactions we did for some of the issuers in 2010, in the case of Wal-Mart the five and 10 year fixed tranche were ¥70bn while the five year floating rate tranche was just ¥30bn. For HSBC Bank, the fixed tranche was ¥77.6bn compared with just ¥32bn for the floater. There was a similar pattern with the transactions we arranged for a number of the Australian banks."
While Australian banks have formed an important source of Samurai supply since the re-opening of the market, in 2010 issuance from the European banking sector gathered conspicuous momentum after the summer, with UK banks leading the way in market share.
At the start of September, Barclays Bank raised the bar for the market in a number of ways when it launched its fourth and largest Samurai bond, a four-tranche ¥143bn transaction, split into fixed and floating three and five year tranches. As well as being the largest issue without a government guarantee since the Lehman shock it offered at a coupon of 1.04% Barclays deal was the lowest price it had ever achieved in the Samurai market, as well as being the lowest for all three year Samurai bonds in 2010.
One telling barometer of investors increased confidence in the Samurai market was their response to Barclays 2010 transaction relative to the reception they had given to the bank on its previous outing in the sector. Barclays Samurai in 2009 generated demand of ¥52.7bn, and was distributed to just 35 accounts. Its 2010 transaction, by contrast, was increased in response to investor demand, allowing all tranches to be priced at the tight end of guidance, with the bonds being distributed to more than 100 investors. These were all onshore accounts, capturing well-diversified demand from public funds, banks, insurance companies, asset managers, regional accounts and others.
Barclays success clearly helped pave the way for other European banks eager to capitalise on opportunities for diversification offered by the rejuvenated Samurai market. "We wanted to leave the path open for other European banks but we also knew we had to be careful with the timing of the transaction," says Setogawa. "We did a comprehensive non-deal roadshow in June, but we decided to issue at the end of the summer because we knew that investors wanted to wait until banks earnings and the stress tests were both out of the way."
In the case of UK banks, another sign of the growing confidence of the Samurai market was its receptiveness to credits that may have been regarded as more complex than Barclays.
In October RBS issued a three-tranche ¥73.1bn deal in October led by Mitsubishi UFJ Morgan Stanley, Mizuho and RBS. The ¥46.9bn three year fixed rate tranche was priced at 135bp over swaps, with the three year ¥5.1bn floater at 150bp over three month yen Libor and the five year ¥21.1bn fixed rate tranche at 165bp over swaps. There were more than 120 accounts in the book, which pointed to the pursuit for yield among Japanese investors.
Soon afterwards, in early December, a debut Samurai for Lloyds Banking Group was more challenging. Led by Citi, Daiwa and Nomura, this raised ¥33.4bn, but its planned floating tranche was shelved.
Instead, the transaction confined itself to two fixed rate tranches of three years (¥27.7bn) at 130bp over swaps and five years (¥5.7bn) at a spread of 160bp, both of which were at the wider end of guidance.
Nevertheless, bankers say that in light of nervousness about the mounting European debt crisis in late November and early December, the Lloyds transaction was a big success. "Negative headlines make Japanese investors jittery, but Lloyds was still able to issue a debut samurai in benchmark size when Ireland was in the news every day," says Naresh Narayan, managing director and head of credit markets at Citigroup Global Markets Japan.
Other European banks that capitalised on the attractive funding opportunities in the Samurai market in 2010 included heavyweights such as BNP Paribas and Deutsche Bank. In the case of Deutsches ¥80bn transaction at the end of November, which was the German banks first Samurai since 2007, pricing on the larger five year fixed tranche at the equivalent of 30bp over swaps represented a hefty saving of about 20bp compared to a comparable euro tranche.
Koreans join in
Another sub-grouping of the Samurai market that has been an important feature of new issuance in the last 12 months is the Korean banking sector. Earlier issuers included Korea Development Bank (KDB) with a ¥27bn trade via Nomura, Nikko Cordial and UBS; and Industrial Bank of Korea (IBK), which raised ¥36.3bn in an issue led by Bank of America Merrill Lynch, BTM UFJ, Barclays Capital and Mizuho.
In November, meanwhile, Hana Bank added to the list of Korean issuers when it priced a debut ¥30bn transaction arranged by Barclays Capital, Mitsubishi UFJ Morgan Stanley and UBS. A more difficult trade was the ¥50bn issue in January 2011 for Koreas third biggest lender, Woori Bank in January 2011.
By then, investors were reportedly unnerved by an increase in sabre-rattling on the Korean peninsula. But Hideo Sakurai, head of capital markets at Daiwa Securities Capital Markets in Tokyo, points out that another string to the Samurai markets bow was also provided in February 2011, when the regional Korean bank, Busan Bank, launched a debut ¥20bn Samurai via Daiwa, JP Morgan, Mizuho and UBS. This was the first time a triple-B bank had funded in the Samurai market since the financial crisis, but the rating was clearly no deterrent for investors.
Although pricing was less than 10bp back from the better-rated Woori Bank, demand was such that the size of the transaction was doubled from its originally indicated ¥10bn. "This may mark a new phase of issuance by regional Korean banks, which did not previously have access to the Samurai market," says Sakurai.
In spite of this upsurge in Korean issuance, bankers believe there is ample scope for more. "Outstanding Korean issuance is still only about 70% or 80% of its total at the pre-Lehman peak, and there is still natural demand on the issuer side," says Setogawa at Barclays Capital. "So as long as transactions are well timed, and come at a fair spread level, we will continue to see strong issuance from Korea."
Elsewhere in the market, meanwhile, corporate borrowers such as France Télécom provided some welcome diversification in the Samurai sector in June when it printed a two-tranche ¥52.3bn transaction via Daiwa, Mitsubishi UFJ and Mizuho. Although France Télécom had issued in Euroyen format before, this was its first outing in the Samurai market, and robust demand allowed pricing on both tranches to come towards the tighter end of the indicated range. The five year ¥46.1bn fixed rate tranche was priced at 52bp over yen swaps, with the small ¥6.2bn floater at 67bp over three month Libor.
Another highlight in the corporate sector was the three-tranche ¥100bn Samurai from Wal-Mart in July via Bank of America Merrill Lynch, Mitsubishi UFJ, Morgan Stanley and Mizuho, which generated demand of ¥230bn. The transaction was divided into a ¥60bn five year fixed rate tranche, alongside a ¥30bn five year FRN and a 10 year tranche capped at ¥10bn, driven by reverse enquiry from life insurance companies. Pricing was 30bp, 40bp and 45bp over yen Libor for the three tranches.
Some bankers argue, however, that the most important corporate Samurai transaction of the calendar year came from Frances Renault, which in December issued a two year ¥45bn issue paying 150bp over yen swaps via BNP Paribas and Mizuho.
Bankers point out, however, that Renault is a special case in the Japanese market. First, its 43.4% stake in Nissan makes it a better-known credit in Japan than many other European auto manufacturers. Second, it was upgraded in November 2010 from BBB+ to A- by the Japan Credit Rating (JCR) agency.
Nevertheless, the Renault deal was welcomed as the first non-investment grade Samurai bond since the retail-targeted transactions from Latin American sovereigns in 2001.
"The Renault Samurai was one of the most significant landmark deals of the year," says Richard Tarn, executive director at Mizuho International in London. "The A- JCR rating was significant for core institutional investors including pension funds, because it facilitated their classification of the transaction as a core investment."
Tarn says Renaults transaction underscored its commitment to its Japanese investor base, and the value to be gained from the perception of being a regular, strategic issuer. "The background to its Samurai was that it visited Japan on a non-deal roadshow to update its existing investors, and responded to very positive reverse enquiry."
Another important landmark in the rehabilitation and expansion of the market came in February, when JP Morgan launched the first Samurai bond by a US financial issuer since Citigroups ¥186.5bn transaction in June 2008. JP Morgans transaction, which was the second largest Samurai of the year, was split into a five year ¥76.9bn fixed rate tranche and ¥34.2bn floating rate portion with the same maturity.
For JP Morgan, the yen market provided a welcome source of highly competitive funding diversification at a time when the dollar market was becoming over-crowded. "At the start of the year JP Morgan issued a large dollar deal and the first quarter of calendar 2011 was a time when many European banks were also issuing in dollars," says Masaki Inoue, executive director and head of debt capital markets at JP Morgan Securities Japan. "As there was significant supply pressure in the dollar market, our treasury took advantage of alternative opportunities, first in sterling and then in yen, where we could price a bond competitive with our dollar cost of funding."
According to a JP Morgan deal summary, the blended all-in cost of funds when swapped back to US dollars was three month dollar Libor plus 100bp. Based on secondary market spreads at the time, this indicated "a marginal pick-up to secondaries and competitive with where JPM would have issued a new five year US dollar deal."
Whether or not the JP Morgan deal has established a benchmark that other US borrowers will build on is open to question. "JP Morgan has always performed well in the Samurai market and was therefore an excellent name to re-open the market to this asset class," says Vince Purton, head of debt capital markets at Daiwa Securities Capital Markets in London. "The big question now is whether other US banks follow."
Few US survivors
There are two reasons why US banks might not beat such an enthusiastic path to the Samurai market as their Australian and European counterparts. Firstly, perhaps surprisingly, there are few US banks still in existence that are previous issuers. Although Citi still holds the record for the largest-ever Samurai bond, a ¥270bn transaction in June 2007, other previous US financial issuers in the market include now defunct names such as Bear Stearns and Lehman Brothers.
The second more serious influence militating against issuance by US banks in the yen market is that the basis swap is far less compelling for borrowers swapping back into dollars than for those with an end requirement in euros, eroding the cost advantage for US issuers.
One area of the Samurai market that has not yet re-established itself as a source of consistent supply is the sovereign sector in unguaranteed format. A planned transaction from Poland at the end of November, for example, was postponed when the news filtering out of Europe unnerved Japanese investors which bankers says is ironic, given that Poland has been one of Europes few economic bright spots, both from a growth and debt to GDP perspective.
"Japanese investors are sometimes too concerned about headline risk," says Fukushima at Mitsubishi UFJ Morgan Stanley Securities. "This was the case with the Poland transaction, which we postponed even though we had some very strong lead orders. We noticed a similar phenomenon with some of the Korean Samurai bonds, where demand has sometimes weakened at times of heightened political concerns over the situation on the Korean peninsula."
Others agree. "Polands deal preparations were proceeding smoothly and then the debt noise from Ireland rose to the fore in the same week as the planned launch," says Purton at Daiwa. "Although investors fully appreciated the strength of the Polish credit, they wanted less uncertainty over Ireland before committing to other European sovereign credits. That was a very short-lived view, a matter of days rather than weeks, as demonstrated by Lloyds being able to come to the market with a very successful debut deal in December, even though it had some exposure to the Irish financial services sector."
In other words, the Polish postponement was down to timing rather than pricing.
Poland is a rarity as an investment grade sovereign that was preparing to launch in Samurai format. But part of the reason why sovereign names have been conspicuous by their absence in non-guaranteed format is that the Samurai market has been closed to those outside investment grade since 2002.
"Turkey issued regularly in the Samurai market a total of 15 times up until the Argentina default when the market closed completely to sub-investment grade credits," says Purton. He believes that Turkeys successful government-guaranteed transaction may serve to restore the borrowers access to the Samurai market in unguaranteed format, especially if, as is widely expected, the sovereign is upgraded to investment grade later in 2011.
"Even for investment grade credits there is a recognition that JBIC support has great value in helping borrowers achieve a funding size and tenor otherwise hard to achieve and more in line with their expectations, and in preparing the way for standalone issuance later," says Purton. "We will see more investment grade sovereign issuance in both guaranteed and standalone format."
Costly red tape
So much for the good news in the Samurai market. The less positive news is that one factor that continues to restrict the appeal of Samurai bonds to some borrowers is the red tape required of most issuers, which is costly and time-consuming. The only issuers that are exempt from these disclosure requirements are the six supranational multilateral development banks, much to the frustration of a number of other SSA borrowers which, quite rightly, regard themselves as being of identical credit quality.
Tokyo-based bankers concede that the documentation required for a Samurai transaction can appear onerous, and that the process can also be time-consuming. "It can take between four and six weeks to issue a Samurai bond, so issuers used to the MTN market may feel that the Samurai market can be slow by comparison," says one.
An initiative that may make Samurai documentation less cumbersome and therefore attract a wider range of borrowers is the Tokyo Pro-Bond initiative, the details of which were outlined late last year by Tokyo AIM. "The Tokyo Pro-Bond market is designed to be as competitive as the Euromarket and over time become a central bond market for the Asian region," Tokyo AIM announced last November. "The new market will enable issuers to benefit from a speed and flexibility of issuance equivalent to using EuroMTN programmes. This will be achieved through greatly simplified disclosure documents and procedures, resulting in a wider issuance window for issuers."Other important features of the issuance procedure in the Pro-Bonds segment include allowing non-Japanese issuers to use English language documentation, which will streamline the process and reduce costs. "Furthermore," Tokyo AIM advises, a tax exemption on bond holdings for non-residents implemented in June 2010, is expected to attract foreign investors to this market."
KfW displays its pedigree
Günther Bräunig, member of KfWs executive board, said when reviewing the banks funding programme in 2010: "Back in 1985 we structured the first yen loan for a Japanese insurance company. Today, our business in Japan has expanded to a current outstanding volume of more than ¥600bn in the public yen format and an issue volume of around ¥3,000bn, mostly in structured private placements."
Coinciding with this landmark, in April 2010 KfW was credited with re-opening the moribund global yen market when it launched a ¥40bn three year trade via Nomura, which was the first global yen transaction from a European SSA borrower for more than a year.
Pricing was 10bp over JGBs, but even at that attractive spread the transaction failed to appeal to Japanese investors. "Although we have seen a notable increase in demand from Japanese investors in our dollar programme, the main sources of support for our global yen transaction were the US and Europe," says Petra Wehlert, head of funding at KfWs Frankfurt headquarters. "Since the crisis the Japanese investor base has remained very domestic-oriented in the yen market."
With the basis swap preventing the yen market from offering attractive funding opportunities to KfW in recent months, and with the disclosure requirements cumbersome and execution slow in the Samurai market, much of KfWs focus in harnessing Japanese demand in 2010 was in the Uridashi and the private placement sector.
In 2010, according to Wehlert, of the Eu2.4bn (equivalent) that KfW raised in Japan, about Eu1bn was via the Uridashi market, in maturities of up to four years. "A notable feature of 2011 has been the popularity of short-term maturities, especially non-call three month Nikkei-linked structures," she says. "For example, we did a very successful ¥30bn equity-linked trade via SMBC Nikko this year and we have had many more requests to repeat this sort of structure since then. So if we had been prepared to issue more of these shorter-dated trades we could already have raised a lot more by this time in the year than we did in the Uridashi market last year." By late March, says Wehlert, KfW had raised more than half of the total it raised in the Uridashi market in the whole of the previous year.
"Until further notice, however, our preference will continue to be for non-call six month transactions," says Wehlert. "Overall we are very happy with the Uridashi market, but over the longer term we would hope to see more demand for longer dated, plain vanilla bonds."
P&G plumps for Euroyen
Among other international borrowers targeting the yen market outside the Samurai sector, one of the highlights of 2010 was the ¥100bn five year fixed rate issue for Procter & Gamble on which HSBC acted as a bookrunner alongside Mitsubishi UFJ in May. Demand for this transaction of about ¥150bn was such that the borrower was able to raise twice as much as it had originally planned at the tight end of price guidance originally set at 28bp-38bp over yen swaps, a range that was subsequently tightened to a range of 28bp-30bp.
A banker involved in the transaction explains that P&G opted for a Euroyen transaction in preference to a Samurai bond because it had previously issued in Euroyen format in a ¥50bn deal maturing in 2010. "Global yen issues are very rare these days, but as P&G had set up a shelf for yen issuance it felt more comfortable with this format," he says.
All but 7% of the P&G transaction went to Japanese investors, led by city banks (which accounted for 36% of distribution), life insurance companies (18%), regional banks and shinkins (13% each). "My initial thought had been that 100% of the transaction should go to Japanese investors, but as P&G is such a rare name even in the US market, we had some demand from investors in Asia and Europe," says the banker.
Elsewhere in the yen market for international borrowers, another highlight of 2010 was the ¥132.6bn ($1.47bn) two-tranche deal led in May by Bank of America Merrill Lynch, Credit Suisse and Mitsubishi UFJ for the Province of Ontario, which was originally planned as a ¥50bn issue. Both tranches were priced at the high end of guidance, with domestic investors taking 88% of the ¥95.7bn five year tranche and 98% of the 10 year ¥36.9bn bond.But as bankers say, international yen transactions remain rare, with borrowers generally preferring to access the Samurai market as a means of plugging into Japanese institutional demand.