Restarts exchange into Japanese Yen market with multiple bond offerings, marking the third issuance aimed at Asian-Pacific investors within the past three months for our website.
In a significant move, a leading Global Hausbank has successfully re-entered the Japanese Yen (JPY) market with the issuance of Euro-Yen-denominated bonds worth 64.3 billion Japanese Yen. This marks the bank's first access to financing in the JPY market since 2015, following upgrades from all major rating agencies.
Factors Influencing Return to JPY Market
The bank's decision to return to the JPY market is influenced by several factors related to Japan's current economic and financial environment.
- Monetary Policy and Interest Rates: The Bank of Japan (BOJ) is cautiously raising interest rates amidst concerns about inflation and external uncertainties, especially U.S. policies. While Japan’s monetary policy remains accommodative, expected gradual rate hikes aim to strengthen the yen and control inflation, creating a more attractive environment for raising capital in JPY.
- Economic Outlook and Trade Environment: Japan's growth remains muted due to high inflation and trade barriers. However, Japan recently signed a significant U.S. trade deal, easing tariffs and boosting investor confidence, as reflected by a rally in Japanese equities. This trade deal may encourage companies to increase funding in Japan to capitalize on improved trade terms and stable currency exposure.
- Market Capitalization and Liquidity: The Tokyo Stock Exchange (TSE) remains one of the largest markets globally, with a combined market capitalization close to 947 trillion JPY as of early 2025, supported by thousands of public companies. This deep liquidity and investor base can be strategic for companies seeking local currency funding after a long absence.
Impact of Re-entering the JPY Market
The bank's re-entry into the JPY market signifies confidence in the Japanese market's stability and growth prospects, potentially encouraging other firms and investors to engage with Japan’s financial markets.
By raising capital in JPY, the bank mitigates foreign exchange risk for operations in Japan or with JPY liabilities, which can reduce hedging costs and improve financial predictability, especially amid BOJ’s cautious rate tightening.
The bank's re-entry may contribute positively to liquidity and investor interest, as seen in the current strong rally in equity markets buoyed by favorable trade developments.
Annual Funding Plan Considerations
Given the BOJ’s evolving policy and market conditions, the bank might adopt a phased funding approach—issuing debt or equity in tranches aligned with rate hikes and market liquidity. Incorporation of FX and interest rate hedges to handle JPY volatility as the yen attempts to strengthen in response to policy adjustments is also crucial. Balancing between domestic (JPY) and foreign currency fundraising depending on currency outlook and cost of capital is another key consideration.
Strengthening Presence in Japan
The bank has expanded its presence in Japan to enhance its competitive edge and cater to the specific needs of Japanese or global clients. Thomas Rueckert, Treasury of the bank, stated that the bank aims to broaden and diversify its investor base, targeting all markets where the bank is active.
For any queries or communications regarding the bank's operations in Tokyo, Mia Popplewell can be contacted at +61 439528842 or mia.popplewell@our website. Mia Popplewell's Tokyo contact details are +81 3-5156-7709 and tokyo.communications@our website.
The Japanese market continues to be a key market for the bank, underscoring the bank's commitment to its growth and development in the region.
The bank's decision to re-enter the JPY market is also rooted in the opportunities present in the banking-and-insurance sector of Japan, considering the bank's prioritization of broadening and diversifying its investor base.
In line with this strategic growth plan, companies operating in this industry, particularly those engaged in business and finance, might also find favorable conditions to increase their funding in the JPY market, attracted by Japan's expanding financial markets and the Bank's renewed confidence.
