Japanese Corp Bond Issuance Hit 4-Year High

Total corporate issuance of straight bonds for individual investors increased 20 percent to 417 billion yen in fiscal 2007, marking the highest level in four years, according to Nikkei. Also the relatively higher yield of interest compared to interest rate of deposits attracted Japanese individual investors.

The last three months of fiscal 2007 saw an especially sharp increase in issuance of such bonds, with seven companies raising a total of 180 billion yen.

On March 4, Bank of Tokyo-Mitsubishi UFJ became the first among Japan's three megabanks to issue bonds for individuals. The bank initially intended to raise 20 billion yen with the three-year bonds carrying a 1% coupon rate, but it "boosted the amount to 30 billion yen due to high demand," according to a bank official.

From a survey of last year's issuance of corporate straight bonds, a clear trend of investing in corporate bonds was found among Japanese individual investors because of high volatility of stocks and forex markets.

The trend is likely to continue this year, the business newspaper said.