Rakuten Group priced a local bond at the year’s highest coupon of 4.691%, which helped build a strong order book driven particularly by overseas investors. The deal gave Japan’s credit market the clearest sign yet of the impact of rising government bond yields on corporate borrowing costs.
The company sold a ¥82 billion ($546 million) perpetual subordinated bond, which is callable after five years at a spread of 350 basis points over Japanese government bonds. Total demand topped ¥500 billion, including more than ¥120 billion from overseas investors, according to lead manager Daiwa Securities.
Japanese bond yields have climbed over concerns the next administration may pursue a more expansionary fiscal policy. Average yields on yen corporate bonds have reached the highest level since 2009, according to Bloomberg indexes. The elevated government benchmark yields have added upward pressure on funding costs for issuers like Rakuten.
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