By Rafael Nam and Rika Otsuka - Analysis
TOKYO (Reuters) - From Australian lenders to the government of Thailand, foreign issuers have sold a record $13.5 billion worth of bonds in Japan so far this year and more borrowers are expected to line up during the rest of 2008.
Japanese institutions have come through the global credit crisis largely unscathed, leaving them with cash to buy bonds issued in the country by foreign entities -- known as Samurai bonds.
Bond issuers are starting to tap the retail market as well, where some 780 trillion yen ($7.3 billion) is squirreled away in cash and deposit accounts that yield very little.
"We are very confident that the volumes will carry on for a while, at least through this year," said Brian Mccappin, Japan head of fixed income, currencies and commodities for Nikko Citigroup in Tokyo.
A confluence of factors have drawn borrowers to Tokyo's bond market.
For one, interest rates are low. The Bank of Japan has held its benchmark interest rate at just 0.5 percent since February last year and analysts don't expect the rate to rise any time soon. That makes it cheaper for fund raisers.
From a lenders perspective, the central bank's rate is still the highest in more than a decade. So a Samurai bond that offers a premium over Japanese rates is attractive to yield-hungry investors.
That was certainly the case in the first half when $13.5 billion in Samurai bonds were issued -- the highest first-half volume on record, Thomson Reuters data showed. Continued...
© Thomson Reuters 2008. All rights reserved.
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