Currencies

Japan’s corporate bond issuers are facing razor-thin pricing in their domestic market, able to get away with thinner spreads than they have pulled off for years. But the new spread environment has not made everyone happy — and bond volumes have tumbled as a result. Matthew Thomas reports.

An evolution is happening in emerging market issuers’ use of yen funding. For many years, many of them have only been able to issue Samurai bonds by using JBIC’s GATE (Guarantee and Acquisition toward Tokyo market Enhancement) programme, but steadily more of them are stepping up to standalone issuance. At the same time, benchmark borrowers are bringing along less established issuers from the same countries in their wake

Japan’s debt market is not often known for its structural diversity, but a smattering of bank capital deals over the past year-and-a-half have provided a rare treat for yield-starved investors. There is little reason, though, to think supply will approach the level local investors would like for a long time to come. Matthew Thomas reports.

Banca Carige has appointed leads for a roadshow to market a prospective covered bond deal that does not currently have an investment grade rating from Moody’s.

SCBC returned to the covered bond market on Monday, following Swedbank, which priced a larger deal at a tighter spread in the same tenor last week. The difference in fortunes is simply a function of the market conditions, which were not good last week, but have deteriorated further. Separately, DVB bank is set to price a €250m shipping loan Pfandbrief.

European banks have been the mainstay of the Samurai market over the last 12 months, and the market has repaid them with loyalty. When European markets were shut during the Greek crisis, Japan stayed open for familiar names, rewarding those who have made the effort to build relationships and a track record. Here, eight issuers and two banks describe their experience.

Japan’s Pro-Bond market is at first glance just a more limited version of the Samurai bond market, where foreign issuers turn to the local investor base for funding. But regulators see Pro-Bonds as something bigger: a way to help Tokyo become a global financial hub. Matthew Thomas reports

The Samurai bond market has long been a key source of returns for investors in the local market, and those investors have plenty more to look forward to. But a challenging swap market could limit issuance. Matthew Thomas reports.

Commonwealth Bank of Australia (CBA) has become the latest bank to get the consent of investors to switch a number of deals from a hard to soft bullet maturity. The probability of a soft bullet extension being triggered should be materially lower from January 2016 when bail-in legislation takes effect, and since soft bullet bonds require a less onerous collateral commitment from issuers, many borrowers should follow suit.

The Swedish Covered Bond Association (ASCB) says its government has proposed legislation that would require local covered bond issuers to hold a minimum 2% overcollateralization (OC). The move is designed to the exempt covered bonds from certain regulations that would otherwise have prevented banks from using derivatives in their cover pools.

Mondelez followed up its Swiss franc debut in March with a second successful outing this week, taking the total raised in the currency this year to Sfr1.075bn.

Coca-Cola made an impressive debut in Swiss francs on Tuesday with a three tranche deal that matched Shell’s August record-breaker in size.