Yen bonds - The great Euroyen recovery

The Euroyen market, which slipped into somnolence in the 1990s, turned out to be the best performing in the world by the end of 1999. A rising yen, Japanese economic recovery and the beginnings of state-sponsored financial reform triggered a series of new issues, first from supranationals, then from corporates. Rebecca Bream reports

For most of the 1990s the Euroyen market has been a shadow of its former self. The primary market hit a spectacular low in 1998. From $55.1 billion worth of business in 1995, Euroyen issuance for 1998 was only $19.3 billion. The market continued to languish in the first half of 1999, only to be revived in spectacular fashion towards the end of last year by a string of supranational deals spearheaded by the Inter-American Development Bank. Euroyen deals in 1999 (up to November 24) total ¥2,572.5 billion ($24.2 billion). As well as the upswing in issuance, the Euroyen market has been the best-performing secondary bond market in the world this year and has suddenly found itself to be the darling of the capital markets. Suddenly investors have been rushing into the market, issuers have been trying to take advantage of this demand and underwriters have been battling it out for mandates. With a successful deal by Toyota Motor Credit Corp in November, there are the first signs of the development of a yen-denominated corporate credit market. Euroyen bonds' previous unpopularity with issuers and investors started in 1995 and 1996, with a combination of very low interest rates and a weakening currency.