TOKYO -- Japanese corporations are expected to issue more than 3.7 trillion yen ($34 billion) in new yen-denominated bonds in the April-June quarter, hitting a record as interest rates fall further into negative territory.
The tally is about 30% higher than in the same quarter last year, and is expected to top the current 3.6 trillion yen record from April-June 1998.
The jump largely came from a series of historic issuances starting in April, with SoftBank Group and Takeda Pharmaceutical each raising 500 billion yen.
More companies are also actively raising money instead of just refinancing old bonds. Bridgestone issued 200 billion yen in new debt fund capital investments and share buybacks.
Corporations are taking advantage of the recent dip in Japan's long rates, fueled by speculation that the U.S. Federal Reserve could also cut rates soon to counteract the economic fallout of the U.S.-China trade war. The yield on 10-year Japanese government bonds fell to minus 0.135% on Friday, one of its lowest points in two years.
Demand for corporate bonds is growing as well, as investors clamor after instruments with positive yields. Nippon Steel and TEPCO Power Grid, a unit of Tokyo Electric Power Co. Holdings, succeeded in issuing more debts than they had originally planned.
With 8.9 trillion yen of corporate bonds reaching maturity in this fiscal year, companies are expected to continue issuing new debt so they can refinance the old.
"Given that the Bank of Japan is maintaining monetary easing until the spring of 2020, investors will continue to be interested in corporate bonds in their hunt for yields," said Toshiyasu Ohashi, chief credit analyst at Daiwa Securities.
