Yen Bond House: Mizuho Securities

IFR Awards 2019
4 min read
Takahiro Okamoto

Global competition

With Japanese investors still crying out for higher-yielding assets in 2019, one bank delivered more cross-border issuance than any of its peers. For its leading role in all the key themes driving the yen market, Mizuho Securities retains its title as IFR’s Yen Bond House of the Year.

Mizuho Securities maintained its dominance in the international yen market by successfully underwriting bail-in-able bonds, leading almost all sovereign issues, and helping first-time issuers. Mizuho earned bonus points as it became the only Japanese bank among the bookrunners hired for Berkshire Hathaway's massive yen deal, extending its lead over Japanese competitors.

In a low-yield environment, with the Bank of Japan endlessly buying JGBs in the name of driving inflation, bail-in bank debt, emerging-market sovereigns and longer-term debt were firmly in fashion in 2019. Mizuho was active in all those segments, topping the international yen league table with ¥820.6bn (US$7.5bn) and a 22.8% share, five percentage points clear of second place.

Bail-in bank bonds were especially important before the end of the Japanese financial year on March 31, when the Financial Services Agency changed risk-weighting rules for some purchases of bonds that count towards total loss-absorbing capacity. Mizuho spotted the opportunity to introduce the first Canadian TLAC bonds to Japanese investors with Canadian Imperial Bank of Commerce's five-year deal, and finished IFR’s review period with a chart-topping underwriting volume of ¥250.1bn.

Mizuho lead managed all but one of the sovereign and quasi-sovereign issues of the year. It underwrote ¥223.1bn, helping eight sovereign-related issuers including Malaysia and Export and Import Bank of India, more than ¥50bn ahead of second place.

The ability to bring new issuers to the yen market was a hallmark of Mizuho’s year. It underwrote almost ¥200bn for six first-time yen issuers – more than double any other Japanese bank – including Berkshire Hathaway, which raised a stunning ¥430bn from a six-tranche Global. Even without the Berkshire blockbuster, Mizuho ranked second both by volume and number of deals for first-time issuers, and it helped three issuers to come back to the yen market for the first time in more than 20 years.

MetLife's yen debut also signalled Mizuho’s ability, together with its peers, to place long-term paper. It had been difficult to find investors for overseas credits at tenors beyond 10 years, but MetLife was able to raise an impressive ¥61.6bn across the 12, 15 and 20-year tranches of its ¥151.7bn transaction.

Mizuho's success comes from its continuous efforts to introduce the yen market to global issuers.

“Last fiscal year we did 79 roadshows, and this fiscal year we have done more than 50 by the end of October, even with respite in the whole month of August,” said Masaya Mizobuchi, head of global debt capital markets at Mizuho.

Mizuho also showed its ability to lead challenging deals with a ¥65bn issue for Gazprom, a rare yen offering from Russia. Gazprom came with a guarantee from Japan Bank for International Cooperation, even though its issuance structure appeared unsuitable for the JBIC wrap. Russian companies typically issue in the international markets through loan participation notes from a special purpose vehicle. Since the SPV is not owned by the issuer, Mizuho, as documentation manager, needed to get the LPN guaranteed by Gazprom and then by JBIC.

Mizuho was able to help Santander Consumer Finance raise ¥50bn – its biggest yen bond and one of the most popular on record for a Spanish issuer.

Exim India’s deal was another highlight. The deal was actually postponed in February as the yen market was not as competitive as the US dollar market at that time, but Mizuho was able to find the right timing later in the year. The deal priced in August and was capped at ¥32bn, but saw books swell to over ¥90bn.

In the domestic market, Mizuho responded to Japanese investors' hunger for yield with an unmatched run of hybrid financings. It led all the hybrid bond issues during IFR’s review period, including Nippon Steel's ¥300bn trade, for an underwriting share of ¥487.4bn, more than any other Japanese bank.

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