Japan

Guarantor: Japan

Three public sector borrowers shrugged off a rally in US Treasury yields to issue a combined $8.25bn in the primary market this week.

Japan Bank for International Cooperation took advantage of the lack of competing supply and good demand in dollars to suck $3bn out from the primary market on Wednesday. Meanwhile, the Province of Alberta has mandated banks for its third benchmark of the year.

AVI Japan Opportunity Fund, a new activist investment fund focused on undervalued cash-rich and over-capitalised Japanese equities, is set to begin trading on the London Stock Exchange on Tuesday, after the company priced its IPO.

China’s top financial regulators coordinated statements boost stocks, Japan and China to resume currency swap agreement, and MoF announces additional details on personal tax cuts.

Public sector borrowers could bring dollar benchmarks next week ahead of the limited funding windows of November. Floating rate issuance was the main play in the sector this week, with Municipality Finance falling just short of full subscription as it brought the latest in the format on Thursday.

Sumitomo Mitsui Banking Corporation (SMBC) has mandated leads to roadshow the first ever Japanese covered bond. The RMBS-backed deal is expected to appeal to a broad universe of traditional investors and will set the tone for Japanese megabanks and other borrowers in what could be a rich supply vein for covered bond investors.

The benchmarking arm of Intercontinental Exchange (ICE) opened an online portal on Wednesday that gives market participants information on alternative risk-free rates designed to replace the Ibors, as well as forward-looking term rates based on the sterling overnight index average (Sonia).

Rating: A1/A

The Development Bank of Japan was able to tighten pricing on a €700m October 2025 sustainability bond this week, something not every issuer has found possible in the currency in the past few weeks. Meanwhile, the World Bank tapped an old friend for $200m with a green bond.

Mizuho Financial Group came to the market on Thursday with a five year senior bond in euros, just as Mitsubishi UFJ Financial Group did on Monday. This week’s Japanese supply has taken the year’s total to a new record.

Beset by low interest margins and a falling population, Japanese banks have looked abroad for juicier returns and have matched this with overseas funding. As Jasper Cox reports, it is a strategy that has made them vulnerable on either side of the balance sheet.