Macquarie success boosts Japan's Pro-bond market
By Frances Yoon
HONG KONG, March 16 (IFR) - Macquarie Bank has become the first Australian issuer to sell Pro bonds in Japan in a tightly priced offering, which raises hopes that the format is gaining traction.
The offfering involved two tranches, totalling ¥34.1bn (US$280m), with a ¥3.2bn three-year bond priced to yield 13bp over yen offer-side swaps and a ¥30.9bn five-year to yield 25bp over swaps. The coupons for the two tranches are 0.353% and 0.563%, respectively.
The size was larger than bankers away from the issuance had expected, mostly due to support from strategic investors, such as the Development Bank of Japan, as well as other major Samurai investors like city banks.
The meagre spreads for A2/A/A rated Macquarie also adds to the appeal of the Pro bond format. Bankers said the bonds priced in line with the traditional Samurai market, despite the far-less onerous documentation requirements.
Pro bonds are faster to issue than Samurai because foreign issuers can sell them off an existing debt programme by simply registering it with the Tokyo Stock Exchange. This step lets issuers circumvent a lengthier process of having to translate their documents into Japanese, which is required for Samurais.
"That combination of ease of use and documentation, plus the size, was more in sync with their funding programme," said a banker close to the deal.
The lack of Samurais from Australian lenders this year had also helped whet Japanese appetite for Macquarie's bonds, said bankers.
The participation of major Japanese investors suggests the Pro bond format is gaining favour as Japan's monetary policies force conservative fund managers to look beyond local government bonds for higher returns. Continuación...