Quartet flock to yen bond market
A quartet of foreign issuers flocked to the yen bond market on the same day, with Renault and Shinhan Bank attracting solid demand as the investment outlook has cleared now that Japan has a new government and the Bank of Japan's latest policy meeting is out of the way.
Slovenia and Hong Kong's Bank of East Asia also printed bonds on Friday.
Renault's three-year Samurai deal was the biggest among the four. Bankers on the deal said investors were keen to buy paper from the once regular Samurai issuer, which had been absent from the market since 2022. This meant some investors took more time than usual to analyse the credit profile and the potential impact of US tariffs. However, the US is not an important market for the French carmaker, whose strategic regions outside Europe are Latin America, South Korea and Morocco, according to its latest earnings report.
Renault's ¥95.2bn (US$622m) senior unsecured Reg S bond priced with a 2.17% coupon at Tonar mid-swaps plus 113bp, in line with final price guidance and at the wide end of initial guidance of 110bp–113bp.
The company had also offered a five-year tranche at 145bp–150bp over Tonar mid-swaps at the start of marketing on Tuesday evening but dropped it the following day.
Mitsubishi UFJ Morgan Stanley and Mizuho were joint bookrunners for the trade, which is rated A– by both R&I and JCR.
Transition bonds
South Korea's Shinhan Bank raised a smaller ¥40bn from a four-part Samurai offering, but the deal size was capped. Orders covered the deal size more than twice, a banker involved said.
The senior unsecured Reg S trade comprises two, 3.25 and five-year fixed-rate tranches and 3.25 and five-year floating-rate notes. These bonds will be issued under the bank's transition bond framework.
Transition bonds are now an increasingly recognised sustainable finance product and the deal came just one day after the International Capital Market Association released climate transition bond guidelines at its annual conference in Tokyo.
A ¥7.5bn 1.322% two-year fixed priced at Tonar mid-swaps plus 40bp, a ¥21bn 1.556% three-year fixed at plus 50bp, a five-year ¥10.5bn 1.732% fixed at plus 55bp and a ¥1bn 3.25-year FRN at plus Tonar compound plus 50bp.
The actual pricing levels were all at the tight ends of initial price guidance shown on Tuesday evening of plus 40bp–45bp for the two-year fixed-rate, plus 50bp–55bp for the 3.25-year fixed, plus 55bp–60bp for the five-year fixed and Tonar compound plus 50bp–55bp for the 3.25-year FRN.
The bank had marketed a five-year FRN at plus 55bp–60bp but dropped it before it set final price guidance on Wednesday evening.
Like Renault, Shinhan returned to the Samurai market for the first time since 2022, when it sold ¥32bn two, three and five-year fixed-rate Samurai bonds.
Daiwa, Mizuho and Nomura were joint bookrunners for the new bond, which is rated AA by JCR and has an expected rating of Aa3 from Moody's.
Slovenia's new Samurai bond was also capped. Books were around ¥50bn, according to a banker on the deal.
The ¥31bn three-year social Samurai bond, issued under the sovereign's sustainability bond framework, priced with a 1.24% coupon at Tonar mid-swaps plus 20bp, the midpoint of the initial guidance of plus 19bp–21bp and the same spread as that of South Korea when it printed a three-year tranche in its four-tranche deal in October.
This is Slovenia's second bond sale in yen after its debut in August 2024, when it raised ¥50bn from three and five-year social bonds.
Daiwa, Mizuho, Nomura and SMBC Nikko were joint lead managers for the new trade, which is rated AA– by JCR and expected to be rated A3/AA/A+, in line with the sovereign's ratings.
A banker on Shinhan's and Slovenia's deals said both deals drew demand from offshore accounts as well as Japanese investors.
Bank of East Asia also came to the yen market to raise just ¥5bn from four-year non-call three non-preferred loss-absorbing Euroyen notes at Tonar mid-swaps plus 160bp. A banker away said investors probably opted out from the Hong Kong credit because of potential impacts from geopolitical tensions, especially between the US and China.
The bank had also sounded investors with a six-year non-call five but dropped it.
It is extremely rare for as many as four issuers to price deals on the same day in the international yen bond market. Three bankers on these deals said it was just a coincidence and linked to the fact that Japan's political uncertainty has lessened since Sanae Takaichi was selected as the new prime minister and because the BoJ wrapped up its policy meeting in late October, keeping rates unchanged.