Japan's $100B Bond Boom Is Just Beginning -- Wall Street Can't Get Enough

Japanese giants are storming the global bond marketand investors are piling in. NTT, Nissan (NSANY), and SoftBank (SFTBY) have just raised over $26 billion in a string of blockbuster deals that's turning heads on Wall Street and beyond. NTT alone pulled in a staggering $17.7 billion, with demand topping $100 billionmaking it the second-largest US dollar bond sale this year. One Morgan Stanley banker is calling this surge of overseas issuance the rise of reverse Samurai bonds. And there's more coming. Kioxia Holdings is next in line, upsizing its debut dollar bond to $2.2 billion. The reason? Japan's local bond market is getting shaky, with yields now twice what they were 18 months ago. Companies are heading west, where demand is deeper, costs are lower, and maturities stretch longer.

Behind the scenes, there's a major shift unfolding. Japan's once-stable debt market is no longer a sure thing. Traders are pricing in more government spending, pushing yields higher and making yen-based debt less appealingboth for issuers and investors. Case in point: a seven-year, single-A yen bond now yields around 1.6%, up from near-zero in 2021. And with 13.2 trillion ($89 billion) in bonds maturing by 2026, non-financial Japanese corporates are facing a refinancing wall. Bloomberg Intelligence credit analyst Sharon Chen points out that sectors like utilities, telecom, and transport are especially likely to go offshore, where the euro and dollar markets offer longer tenors and tighter spreads.

For global investors, this could be just the beginning. Japan still makes up a tiny slice of global bond indexesjust 2% in the dollar high-grade market and 1.6% in Europe. That's part of the appeal. Portfolio managers are hungry for new names and fresh diversification plays. And with syndicate desks flush with cash and demand running hot, issuers are striking while the window's wide open. As JPMorgan's Andreas Michalitsianos put it: Supply only comes when there's demand. Right now, that demand is roaring.