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Japan-Update

Japan Inc. bond offerings seen reaching record in fiscal 2016

Eager to grow, companies seek cheap funding amid low interest rates

TOKYO -- Bond offerings by Japanese companies appear headed for a record in fiscal 2016, the first milestone in 18 years, as the Bank of Japan's negative rate policy makes it easier for companies to raise funds on the cheap.

Corporate bond offerings are seen reaching 11.3 trillion yen ($99.1 billion), up roughly 60% on the year.

Human resources company Recruit Holdings will issue its first-ever round of corporate bonds this month, and Tokyo Electric Power Co. Holdings is set to offer its first in six and a half years. Other companies plan to follow suit with offerings this month, including bearing maker NSK and railway operator Seibu Holdings. Factoring in planned issues makes for the highest figure since 1978, the first year of available data.

The current record of roughly 11.2 trillion yen was set in fiscal 1998. That year, banks grew extremely cautious with lending, stung by events such as the collapse of major brokerage firm Yamaichi Securities the year before. As an alternative, many enterprises turned to the bond market.

But this time around, companies are on the offensive. Fujifilm Holdings, which decided in February to issue 150 billion yen in bonds, intends to use the money on growth investments such as acquisitions in the medical field.

Since the start of the year, expectations have built for a rise in interest rates. Further key rate hikes by the U.S. may create upward pressure in Japan as well.

"More businesses are considering speeding up their fund procurement schedule," said Hajime Suwa at Mitsubishi UFJ Morgan Stanley Securities.

(Nikkei)

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