Improving swaps lure foreign issuers back to Samurai bonds

domingo 18 de septiembre de 2016 22:10 GYT

* Better funding costs drive European lenders to return to yen market

By Frances Yoon

HONG KONG, Sept 19 (IFR) - Japan's Samurai bond market is staging a comeback after an improvement in cross-currency swap spreads put the country back on the radar for international issuers.

Standard Chartered was the first to take advantage of the improved conditions, with a five-year senior bond on September 8 that marked the first Samurai issue in almost two months. The five-year yen/euro basis swap has narrowed from -56bp in mid-June to -37bp, while the yen/dollar equivalent has shrunk from -96bp to -82bp.

A less negative swap translates to a lower premium over euro or US dollar Libor for companies that borrow in yen.

Sources say French banks are now closely monitoring markets as they look to follow StanChart's lead, breathing life into a sector that had stalled due to volatile yen rates and Brexit fears.

None of the French lenders have mandated for Samurais yet, said a banker close to the talks.

The last foreign issuer to sell Samurai bonds in Japan was Mexico's state-owned oil company Petroleos Mexicanos (Pemex) , which raised 80 billion yen ($783 million) in July.