(Bloomberg) — Japanese companies are selling record amounts of short-term bonds, in a sign that they are preparing for the possibility of the central bank dismantling its ultra-low interest rate policy.
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Issuance of yen corporate bonds due in five years or less reached an unprecedented 7.4 trillion yen ($56 billion) in the fiscal year ending March 31, according to data compiled by Bloomberg. It came as sales of Japanese debt due in more than five years fell during the period to 5.4 trillion yen, the lowest level since fiscal 2015.
The rush to issue shorter bonds reflects market speculation that the Bank of Japan under new governor Kazuo Ueda will end a decade of ultra-easy policy, a move likely to hurt longer debt particularly. If the Bank of Japan tightens credit, it will join central banks around the world that have raised interest rates in an effort to tame rapid inflation.
Sales of corporate bonds with maturity of five years or less globally fell 16% in the year ended March 31. But this represented a slower pace of decline than the overall 28% decline in sales of the company’s banknotes worldwide, as accelerating inflation and rising interest rates made trails in debt markets.
In Japan, shorter corporate bond issuance jumped 179% in the January-March quarter as the government announced Ueda’s surprising nomination as governor of the Bank of Japan. Companies including internet company Rakuten Group Inc. and Nissan Motor Co., the automaker, to raise yen money.
The Nikkei reported a jump in sales of the company’s yen securities earlier Sunday, citing data from N Information Systems Limited.
— with assistance from Ameya Karve.
(Updates with chart.)
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