European and US borrowers have raised more than $20 billion in
the domestic Japanese bond market so far in 2003. Issuance is
expected to rise further this year as demand increases.
Japan's domestic bond market has been a reliable source of cheap
debt for highly rated European and American borrowers since the
1980s. However, issuance fell slightly in 2002 because of investor
uncertainty about the direction of the Japanese economy. The market
has been significantly busier in the first quarter of 2003. Over
the past five months, international borrowers such as German
development bank KfW and the Nordic Investment Bank have raised
more than $1 billion a week in the market.
Most of the issues have been structured notes linked to the
direction of the yen/dollar exchange rates, and interest rate
differentials between Japan and the US. These bonds are popular
with Japanese investors because they yield more than local domestic
bonds....
