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Yahoo Japan Prices $2.1 Billion Jumbo Bonds as Yields Slide

Yahoo Japan Prices $2.1 Billion Jumbo Bonds as Yields Slide

(Bloomberg) -- Yahoo Japan Corp., operator of the nation’s biggest web portal by user numbers, sold 230 billion yen ($2.1 billion) of yen bonds on Thursday, tapping investor hunger for positive spreads as underlying interest rates become more negative.

It’s the biggest sale of senior notes targeting professional investors in the yen market this fiscal year, according to data compiled by Bloomberg. Yahoo Japan’s four-part deal, by far its largest ever, included three-year debt paying a coupon of 0.04%.

SoftBank Group Corp.’s Masayoshi Son helped launch Yahoo Japan in the 1990s and the publicly-traded internet company is part of the SoftBank group today.

Key highlights

  • There’s good demand for corporate bond issuance in Japan right now, and the supply-demand balance will likely remain tight ahead amid a global trend toward monetary easing, said Shunsuke Oshida, senior credit analyst at Manulife Asset Management.
  • Yahoo Japan is a strong investment-grade rated issuer and the notes are coming to market 3-5 basis points cheaper than existing issues from the company as well as similarly-rated bonds in the market, according to Bloomberg Intelligence analyst Timothy Tan.
    • Yahoo Japan is rated AA- by Japan Credit Rating Agency and A+ by Rating & Investment Information Inc.
  • The company plans to use the funds from the bond sale to refinance existing debt, replenish operating funds after a recent stock buyback and for business expansion, according to a filing by the issuer Thursday

More Numbers

  • The coupon on Yahoo Japan’s 10-year bonds is 0.46%, higher than the 0.44% on a similar-maturity bond sold by BBB+ rated Nitto Boseki Co. last week, pointing to the attractiveness of the debt sale.
  • For the three-year note, its coupon of only 0.04% is still about 25 basis points higher than the yield on similar-maturity Japanese government bonds.
  • The average interest rate on corporate yen bonds rated A or higher is 0.21%, according to Nomura BPI indexes.

--With assistance from Issei Hazama.

To contact the reporters on this story: Shiho Takezawa in Tokyo at stakezawa2@bloomberg.net;Mei Futonaka in Tokyo at mfutonaka@bloomberg.net

To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Finbarr Flynn, Ken McCallum

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