Yen Bond House: Mizuho Securities
Driving momentum For skillfully navigating Japan’s return to positive interest rates and maintaining momentum in the yen bond market by delivering large deals and stimulating investments, Mizuho Securities is IFR's Yen Bond House of the Year.
Mizuho outgunned its rivals in 2024 to win the top spot in all international yen bond league tables underwriting ¥692bn (US$4.4bn) of deals for a 22.3% market share.
Helping to put the Japanese securities firm at the summit were two huge deals by Berkshire Hathaway – a ¥263.3bn seven-tranche Global yen bond in April and a ¥281.8bn seven-part offering in October.
International yen bond supply increased 2.5% in 2024, bolstered by supply from US issuers. The prospects for the market had looked bleak in January, however, as reluctant bond investors watched for the Bank of Japan to normalise its monetary policy.
“As the BoJ raised rates this year, Japan investors maintained a very cautious stance to get themselves prepared for more hikes,” said Masaya Mizobuchi, head of global debt capital markets at Mizuho. “The tenors they bought in the international yen bond market were mainly at the short end, and such a tendency was evident in the domestic bond market as well, so [our capabilities] were tested all year long in terms of how to fulfil issuers’ needs to raise long-term funds.”
Mizuho gave investors a nudge when Berkshire's jumbo April trade followed the end of the BoJ’s negative interest rate policy in March.
The deal “worked as a catalyst in boosting the momentum for the rest of the year”, Mizuho bankers said. Mizuho worked on the deals that followed, including Indonesia’s record ¥200bn Samurai and private equity firm KKR’s ¥91.4bn trade in May, its largest since its debut in 2018.
Mizuho’s deals demonstrated the good use it made of its global distribution platform as it brought a wide range of offshore investors into the order books, enabling issuers to sell ultra long-end bonds even when Japanese investors were defensive. The bank allocated 31% of the international yen deals it led to offshore investors, versus 11%–16% in the previous four years.
When the BoJ finally raised its policy rate in July, Mizuho and three other leads decided to push back Mexico’s sustainable development goals Samurai to late August. The deal avoided market turmoil and Mexico raised US$1bn-equivalent, twice as much as its deal in 2022.
The bank’s market savvy also guided experienced issuer Berkshire in its return to the market in the fourth quarter. The US issuer had raised more than ¥1.5trn since its debut in 2019, leaving many investors at or near their credit limits. Mizuho advised that investors would return after the company’s ¥108.5bn bond matured in September. The October deal was a smash hit, raising even more than the April issue, with some investors raising their credit limits to participate.
Mizuho played a strategic role in Export-Import Bank of Korea’s return to the Samurai market in November as it set out to reprice South Korean issuers’ yen bonds following a sovereign deal in 2023 that set a benchmark too wide for other South Korean issuers to want to follow. Kexim priced inside the sovereign with its ¥65bn three, five and seven-year bonds printing 4bp–9bp tighter.
In the domestic market, Mizuho was a supporter of Japan’s energy policy through its capital markets deals. Nuclear power has a complicated history in Japan but remains crucial to energy security and net-zero transition plan.
The bank led a deal by Kyushu Electric Power that earmarked its transition bond proceeds to nuclear power investment. The deal in May was followed by other power companies such as Kansai Electric Power and Hokkaido Electric Power, providing much needed funding for the nuclear sector.
Mizuho also helped revive the domestic hybrid bond market. Many hybrids were issued in 2019, meaning they were coming up to their call dates in 2024. But unlike 2019 when investors were searching for yield under the low interest rate environment, market conditions looked more challenging amid uncertainties. The revival was led by Takeda Pharmaceutical, which sold a ¥460bn 60-year non-call five in June. Mizuho notably introduced a unique feature to Fuyo General Lease’s ¥20bn sustainability-linked 35-year non-call five as it linked the issuer’s executive pay to the sustainability performance targets, Japan’s first commitments of this type.
Mizuho finished on top of the domestic corporate bond league tables with a 23% market share.
To see the digital version of this report, please click here.
To purchase printed copies or a PDF of this report, please email leonie.welss@lseg.com
