Corporate governance reforms that have underpinned a nearly $2 trillion (¥308 trillion) rally in Japanese stocks are increasing the draw for investors in credit.
Japanese corporate dollar bonds have been outperforming U.S. peers, and borrowers have piled into the market with record issuance in recent months. Improved governance scores are helping to burnish the country’s credit at a time when the economy has finally shaken off decades of deflation, allowing the Bank of Japan to move away from rock-bottom interest rates.
"We are seeing a change in the economic conditions and the corporate culture in Japan,” said Angus Hui, head of fixed income at Fullerton Fund Management in Singapore. While those developments initially focused on shareholders, they’re becoming a "pull factor” for credit investors too, he said.