COUNTRY REPORT JAPANand ¥10bn of 0.488% 30-year bonds.
Mizuho and SMBC Nikko were the leads.
SYNDICATED LOANS
› BUNGE COMPLETES US$375M REFI
New York-based global agribusiness and
food company BUNGE has closed a US$375m
five-year loan that refinances a dual-
currency borrowing maturing in December,
sources said.
Mizuho Bank, MUFG and Sumitomo Mitsui
Banking Corp were the mandated lead
arrangers and bookrunners of the deal,
which was signed on July 1.
The loan is split into a ¥30.7bn
(US$285m) tranche and a US$90m tranche,
which pay interest margins of around
80bp and 120bp over yen and dollar Libor,
respectively, unchanged from the previous
deal, one of the sources said.
The borrower’s debut loan in Japan was
a US$375m five-year facility completed in
December 2014. SMBC was the MLA.
In December 2018, Bunge amended and
extended a US$1.1bn five-year revolving
credit via its subsidiary Bunge Ltd Finance
Corp, which paid a margin of 125bp over
Libor and a 12.5bp commitment fee based
on the company’s rating of BBB by S&P.› JBIC BACKS MITSUI'S RUSSIAN LNG STAKEJAPAN ARCTIC LNG, a Dutch joint venture
between Japan’s Mitsui & Co and Japan
Oil Gas & Metals National Corp, signed a
€125m (US$141m) loan with Japan Bank for
International Cooperation last Monday, JBIC
said in a statement.
Private financial institutions alsoprovided a loan with an undisclosed
amount on top of JBIC’s loan.
Funds are to back Japan Arctic LNG’s 10%
stake purchase in Russia’s Arctic LNG 2
from natural gas producer Pao Novatek.
Mitsui plans to offtake LNG produced by
Arctic LNG 2, which builds and operates
an LNG plant with an annual capacity of
19.8 million tons on the Gydan Peninsula
in the Yamalo-Nenets Autonomous district
of Russia.› NRI RAISING BRIDGE FOR SHARE BUYBACKNOMURA RESEARCH INSTITUTE is raising a ¥100bn
one-year bridge loan to back a planned
¥160bn share buyback, according to an
exchange filing.
MUFG is the sole lender of the bridge.
The Japanese economic research firm
on Monday launched a buyback offer atBusy first half for yen, but slowdown ahead
Bonds European banks, sovereigns boost yen issuance volumesInternational yen bond issuance topped ¥2trn
(US$18.6bn) in the first half of 2019, a 57%
increase from the same period a year earlier,
as European banks and huge sovereign
Samurai transactions drove the busiest start
to the calendar year since 2008.
Volume is expected to drop in the second
half of the year as European lenders had
rushed to sell bail-in-able bonds before
higher risk weightings for regional investors
kicked in on April 1.
According to Refinitiv data, international
yen issuance reached ¥2.12trn in the first half,
up from ¥1.35trn a year earlier.
The key theme in January to March was
the last-minute issuance from European
banks. Japanese regional investors were
hungry for bail-in-able bonds before the
implementation by the Financial Services
Agency at the end of March of a new risk
weighting rule for investments in bonds
counting towards total loss absorbing
capacity requirements.
BNP Paribas, BPCE, Rabobank, ING Groep,
Societe Generale and Credit Agricole printed
bail-in-able bonds during the first quarter.
Notably, BPCE and ING were the only
banks not to choose a euroyen format, as
most of the lenders wanted quicker funding
than the traditional Samurai format, which
has a longer marketing period. Still, BNP
Paribas was able to raise over ¥140bn from
a dual-tranche callable senior non-preferred
bond offering, while BPCE used the investor-
friendly Samurai format to raise ¥163.6bnfrom a five-tranche senior preferred and SNP
transaction.
Issuance was expected to slow because of
the reduced demand for TLAC bonds from
April onwards, but sovereigns came to the
rescue.
Malaysia printed in March a massive
¥200bn 10-year Samurai bonds with a
guarantee from Japan Bank for International
Cooperation, and Indonesia raised ¥177bn
without such a guarantee from a six-tranche
transaction. Mexico drew over ¥220bn of
orders for a capped ¥165bn four-trancher.
The issuers in the first half were more
diverse than usual, as the regular European
banks were joined by issuers from other
regions.
From the US, Bank of America and MetLife
raised ¥86.3bn and ¥151.7bn, respectively.
From Asia came Korea National Oil,
Korean Air, Malayan Banking, HongKong
Shanghai Banking Corp and China
Construction Bank. From Latin America,
Bladex returned to refinance with a small
three-year euroyen.SLOWER SECOND HALF
One syndicate banker said he thinks volume
will slow down substantially in the second
half, partly because of the reduced demand
for TLAC bonds. Indeed, SNP tranches from
BPCE and Credit Agricole in the second
quarter only drew ¥55.6bn and ¥35.9bn,
respectively.
Falling yen rates are also a new headachefor Japanese syndicate bankers. The five-year
yen swap rate dropped about 14bp in the first
half.
If Japanese investors stick with certain
absolute yield levels, foreign issuers will need
to pay a wide spread over yen swaps, likely
discouraging them from choosing the yen
market for funding.
The currency rates are also problematic for
bankers trying to bring new issuers to the yen
market.
Canadian banks are potential yen bond
issuers as they have been actively selling
bail-in-able bonds in dollars and euros and
are expected to do so in yen eventually. Last
week, Toronto-Dominion Bank issued its first
bail-in-able Kangaroo in Australia.
However, falling swap rates would make
Canadian bonds less attractive to Japanese
investors.
“The new five-year TD bond in Australian
dollars priced at a 100bp spread is equivalent
to an absolute yield level of just 0.06% in
yen,” said a second syndicate banker. “(At
that level) I think investors would choose to
buy domestic municipal bonds.”
SNPs from Nordic banks would not be
attractive either.
Their SNPs are currently trading about
50bp over Libor in euros, which is about
20bp over in yen and 0.14% in an absolute
yield terms,” said the syndicate banker. “I
think investors would go to domestic electric
power companies which yield 0.18%.”
TAKAHIRO OKAMOTO