SoftBank Group has set the interest rate on its retail investor bonds worth 1 trillion yen, or approximately 6.3 billion dollars, at 4.75% for 7-year bonds, amid rising interest rates in Japan, which has increased the attractiveness of investing in debt securities and may encourage more Japanese companies to raise funds from retail investors. The interest rate is at the relatively high end of the 4.3-4.9% range that SoftBank announced in August, and is significantly higher than the average yield of about 2.3% for yen-denominated corporate bonds issued to retail investors in Japan this year. This bond issuance comes at a time when the yield on 10-year Japanese government bonds has surged above 3% for the first time in about 30 years, making debt securities more appealing to Japanese households. Kazuma Ogino, a senior credit analyst at Nomura Securities, believes that both the yield level and the large issuance size of 1 trillion yen could attract new retail investors to the market. Japan's retail bond market is expanding rapidly, with the value of yen-denominated corporate bonds issued to retail investors from the start of the year to September 4 reaching 2.88 trillion yen, including SoftBank's 1 trillion yen deal, and surpassing the total issuance for any full year in the past. This growth comes as Japanese companies have increased capital needs for mergers and acquisitions and growth investments. Ogino noted that turning to retail investors helps diversify funding sources and reduces pressure on credit spreads. This trend could benefit both companies seeking additional funding channels and retail investors looking for higher returns, while helping to expand Japan's retail bond market as the country enters a higher interest rate environment.
SoftBank Group Corp.SoftBank issues 1 trillion yen bonds at high 4.75% interest, increasing debt costs.
