Borrowing Demand Remains Strong Even at 3% Interest Rates, Companies Focus on Cost Control and Buyer Development

Macro
โดย Reuters·JP·Read original
Summary · why it matters

With the yield on new 10-year government bonds, a benchmark for long-term interest rates, hovering near 3%, corporate funding costs are rising, but demand for funds for capital investment and M&A remains strong. Companies are struggling to control costs by shortening the maturity of corporate bonds, while also rushing to develop overseas and individual investors. Against the backdrop of rising government bond yields, there is a clear trend of corporate bonds with higher spreads attracting demand, and Sumitomo Forestry's public hybrid bond of approximately 250 billion yen drew orders of over 700 billion yen, nearly three times the issue amount. According to the Ministry of Finance's Financial Statements Statistics of Corporations, capital investment in the April-June 2026 quarter increased 1.6% year-on-year to over 13 trillion yen across all industries, and the Bank of Japan's June Tankan survey showed that large enterprises' fiscal 2026 capital investment plans rose 11.5% year-on-year. Meanwhile, regional banks, shinkin banks, and credit cooperatives, which were major buyers, have shifted to issuing their own bonds, and pension funds and asset management companies are increasing their presence. Companies that cannot secure the necessary funds from domestic institutional investors alone are expanding their funding sources to overseas and individual investors, with SoftBank Group issuing individual bonds worth 1 trillion yen domestically. According to Daiwa Securities' estimates, Japanese companies' dollar bond issuance approached 100 billion dollars in 2025, and has already reached about 50 billion dollars in 2026.

Impact on stocks 4

Financials▲ · 2 stocks
SoftBank Group Corp.
9984
▲ PositiveCapitalrelevance

SoftBank Group is issuing 1 trillion yen of individual bonds domestically, a financing event expanding its funding sources.

Daiwa Securities Group Inc.
8601
▲ PositiveDemandrelevance

Daiwa Securities' estimates are cited showing Japanese corporate dollar bond issuance near $100B in 2025 and ~$50B already in 2026, expanding its underwriting/funding business.

Climate Adaptation & Water▲ · 1 stocks
Sumitomo Forestry Co., Ltd.
1911
▲ PositiveCapitalrelevance

Sumitomo Forestry's ~250 billion yen public hybrid bond drew over 700 billion yen of orders, nearly 3x the issue amount, a successful financing event.

Others▼ · 1 stocks
％Japan Government Bond 10Y
JP-10Y
▼ NegativeMonetaryrelevance

Article centers on the 10-year JGB yield hovering near 3%, a benchmark long-term rate, implying elevated yields (bond prices down).

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