Japan

Berlin Hyp has become the latest FIG issuer to enter the green senior unsecured market in euros, after Sumitomo Mitsui Financial Group (SMFG) and Mizuho Financial Group opened up issuance from Japan earlier this month.

Sumitomo Mitsui Banking Corp returned to market as it took a combined $4bn amid red-hot funding conditions.

Rating: A1/A

The Development Bank of Japan has managed to yank the spread in by 8bp for its third sustainability bond on Wednesday, which was still more than three times subscribed.

Mizuho Financial Group came to the market with a bond financing green projects on Tuesday, becoming the second Japanese bank to do a green euro deal in two weeks.

Rating: A1/A-/A

Sumitomo Mitsui Financial Group (SMFG) came to the market with a seven year senior unsecured bond on Wednesday to finance green projects, with Mizuho still in the pipeline for a green deal of its own.

French banks have been frequenting the Samurai market all year, and the latest trade from Banque Fédérative du Crédit Mutuel (BFCM) this week offered Japanese accounts a rare chance to invest in the senior preferred format.

International investors are recognising the progress that Abenomics has made in turning around Japan’s recently moribund economy. The long-awaited acceleration in domestic demand is finally taking place, while business confidence is high. But can this progress be maintained while inflation and government finances remain weak and North Korea pushes the region towards conflict?

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.