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Japan's first zero-rate corporate bond on the way from Toyota unit

Move may usher in a new normal of negative-yielding private-sector debt

The Toyota logo on a steering wheel. The finance unit of the automaker is taking advantage of the ultralow interest rate environment to issue bonds that effectively have no interest rate. (Photo by Hiroshi Kotani)

TOKYO -- A Toyota Motor group finance unit will issue Japan's first zero-rate corporate bond Oct. 25 as subzero yields spill over from government bonds to private-sector debt, which carries the risk of default.

Toyota Finance will issue 20 billion yen ($184 million) in three-year bonds with a face value of 100 yen and a coupon rate of 0.001%. These will be sold for 100.003 yen, canceling out any interest rate burden for the company.

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