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Wal-Mart has sold Y100bn ($929m) of Samurai bonds, in the largest issue by a non-financial company this year, adding to the increasing number of foreign companies tapping the Japanese market’s large pool of yield-hungry investors.

The bonds of the world’s largest retailer were bought by institutional investors with demand exceeding the deal size, according to a banker involved in the deal.

Samurai issues (yen-denominated bonds issued by a foreign institution to Japanese investors) have surged this year, with $14.8bn raised to date, up 48 per cent on the same period in 2007, according to Thomson Reuters. This figure is closing in fast on the $16.9bn raised in 2007, which was the highest amount since 2000, in spite of it being only July, although it remains to be seen if the size of deals will continue.

Analysts said the Wal-Mart offer was particularly popular because it allowed investors to diversify away from the financial sector, which has dominated Samurai issuance of late.

Investors also like exposure to well-known brands with high credit ratings, both of which the company has. Wal-Mart is rated AA by Standard & Poor’s.

“What we have likely seen is more of the cash earmarked for domestic yen investment being switched to issuance in foreign names, particularly while spreads remain at elevated levels for foreign issuers, but also as the local capital markets business becomes increasingly global in its perspective,” the banker said.

With Japan’s interest rates looking set to remain at about 0.5 per cent, Japanese investors, institutional and retail, retain a keen eye for low-risk, high-yielding deals they cannot get at home.

Uridashi bonds (foreign currency-denominated debt issued to Japanese retail investors) have also surged this year, with particular interest in currencies of economies with strong commodity exposure.

Australian banks, which appear to have had relatively less subprime exposure compared with some European and US-based counterparts, have been keenly tapping the Samurai market, with issues from ANZ Banking Group, Commonwealth Bank of Australia, Westpac and National Australia Bank, which have provided some of the biggest issues.

This does not mean that those with significant subprime exposure have not been able to tap the Japanese market though. The biggest issue this year has come from Citigroup, with a Y186.5bn deal. UBS has also sold Y91.5bn this year.

Copyright The Financial Times Limited 2017. All rights reserved.
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