Japanese companies' subordinated bond issuance is recovering as demand for acquisition and refinancing funds aligns with investors' preference for higher yields. Panasonic Holdings was reported to have issued ¥100 billion, while Osaka Gas issued ¥10 billion, and Sumitomo Forestry is scheduled to issue approximately ¥250 billion next week.
Issuance of hybrid bonds, or subordinated bonds, by Japanese companies is recovering as investors' preference for higher yields aligns with companies' need for acquisition and refinancing funds.
Panasonic Holdings decided to issue ¥100 billion in subordinated bonds. Osaka Gas also issued ¥10 billion on the same day. Sumitomo Forestry is scheduled to issue approximately ¥250 billion next week. Including these issues, total issuance for the fiscal year is expected to reach approximately ¥1.18 trillion.
Subordinated bonds offer higher yields because they rank lower for repayment in the event of a default. At the same time, because they are recognized as capital-like funding, they allow companies to raise funds without diluting existing shareholders. Some analysts also say that bonds with longer periods before the first call can limit long-term risk.
Investor demand remains strong, with spreads in basis points (bp) and yield levels through the first call holding firm. Financial industry sources say stable corporate earnings and relatively wide spreads are supporting demand.