This week is shaping up to be one of the most active periods this year for Japanese companies seeking overseas financing, with Nomura Holdings and Sony Group (SONY.US) spearheading a wave of Asian issuers launching multiple transactions in the global bond market on Tuesday.
Sony intends to tap the international debt markets to secure funding before borrowing costs climb further, marking its first return to the US bond market in nearly three decades. The entertainment and technology conglomerate has mandated Bank of America and Morgan Stanley to arrange a series of investor calls in preparation for a proposed two-tranche, US dollar-denominated investment-grade bond offering.
The company has engaged Bank of America and Morgan Stanley to arrange investor meetings, planning to issue bonds with 5-year and 10-year maturities. This represents the first time since 1998 that the company has directly returned to the US bond market for funding. The planned bonds, with expected tenors of 5 and 10 years, will raise proceeds for general corporate purposes, as disclosed in regulatory filings with the US Securities and Exchange Commission (SEC).
Following its divestment of its financial and banking subsidiary last year to fully focus its strategic efforts on core entertainment segments like gaming, music, and film, S&P upgraded Sony's credit rating to A+ in March, citing its robust cash flow. The funds raised from this international bond issuance will be used for general operations and potential acquisitions of global entertainment assets.
Sony has notably accelerated its pace of mergers and acquisitions in the entertainment and intellectual property space recently, exemplified by its successful acquisition of a controlling stake in the "Peanuts" franchise from WildBrain, aiming to secure greater control in the complex global content streaming rights environment.
Nomura is at the forefront of overseas bond issuance and the Japanese M&A market. As Japan's largest securities firm, Nomura Holdings is joining Sony in leading a significant cohort of Asian and Japanese issuers to price and raise funds in the overseas bond market this week.
With the Bank of Japan historically raising its benchmark interest rate to multi-year highs, the yield on Japan's domestic 5-year government bonds has been pushed to around 1.91%, showing signs of weakening demand from institutions like CityBank in recent auctions. To diversify funding sources and lock in more attractive spreads, Japanese giants such as Toyota, Denso, and NTT are turning to the US dollar or euro bond markets.
Nomura has substantially increased its fee income by assisting these Japanese companies with overseas debt underwriting. In the latest annual statistics, the total value of Japan-related M&A transactions reached a record high. Nomura Securities successfully outperformed Goldman Sachs to reclaim the top spot in Japan's M&A advisory market, participating in advisory work for deals worth a total of ¥18.6 trillion (approximately $121 billion) over the year.
Furthermore, according to informed sources, the financial subsidiary of Japanese telecom giant NTT also plans to commence roadshows for fixed-income investors starting Tuesday regarding debt issuances denominated in US dollars, euros, and British pounds.
Currently, credit spreads for investment-grade corporate bonds are hovering near their lowest levels in nearly two decades—a threshold set by the US dollar bond market in January—prompting issuers to accelerate their global debt financing plans during this favorable window. This activity mirrors similar cross-border financing moves by other major Japanese corporations.
Earlier this week, Japanese auto parts maker Denso completed a $500 million bond issuance on Monday; Toyota Motor raised 1 billion euros (approximately $1.1 billion) through a two-tranche sustainability bond offering. NTT set a record for the largest offshore bond issuance by a Japanese company last July at around $18 billion and returned to the global market again this February, with plans for another issuance now.
Japan is becoming a hotbed for merger and acquisition activity, with the resulting financing needs propelling its borrowers to surpass China and claim the top spot by volume in Asia's global bond market. Market data compilations show that the last single week with over five Japanese issuers launching bonds in the global market dates back to April of this year.
Additionally, this week's surge in Japanese bond issuance carries a seasonal element—coinciding with the annual general meeting season, when companies finalize their full-year financing plans.
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