Yen Bond Yielding 0.0000027% a Hit Amid Emerging-Market Rout
Despite paltry returns, investors’ orders for the debt came to about 4.3 times the 65 billion yen that was offered.
(Bloomberg) -- It must be tough out there in volatile emerging-debt markets. Overseas investors including Asian buyers this month bought a chunk of yen bonds from a Japanese highway operator yielding 0.0000027 percent.
East Nippon Expressway Co. sold one-year notes at a coupon of 0.001 percent and an issue price of 100.001 yen on June 13. That means that an investor buying 100 million yen ($908,000) of the notes will receive 2.7 yen in interest, according to Bloomberg calculations. Even so, investors’ orders for the debt came to about 4.3 times the 65 billion yen that was offered, according to underwriters.
Asian investors hit by a rout in emerging market bonds and in search of safe assets participated in the yen deal, according to people familiar with the offering, who aren’t authorized to speak publicly and asked not to be identified.
The sell-off in emerging markets that battered Argentina to Turkey is putting increasing pressure on central bankers in Asian nations such as Indonesia and India that have seen some of the biggest fund outflows and currency declines, as global trade tensions and higher U.S. Interest rates unnerve investors. In Japan, with yields on local sovereign bonds as long as seven years below zero due to the Bank of Japan’s negative-rate policy, even the smallest positive debt yield can appear to be a good deal, according to investors.
Overseas Investors
East Nippon Expressway has been seeking to build its foreign investor debt base and has held non-deal investor meetings in Singapore, Hong Kong and Seoul, according to Hiroyuki Kawae, a manager in the Tokyo-based company’s finance management section.
The bonds are to finance operations for the delayed-completion of a Tokyo-area road construction project, and the company doesn’t plan to sell more of the notes, he said.
One investor said that the bonds are a good value considering that it has the same credit ratings as Japanese government notes, which yield about minus 0.13 percent for one-year debt.
To contact the reporter on this story: Issei Hazama in Tokyo at ihazama@bloomberg.net
To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Ken McCallum, Finbarr Flynn
©2018 Bloomberg L.P.