Key facts
- Japanese retail investors are increasingly buying corporate bonds.
- SoftBank and Rakuten are among the popular issuers of these bonds.
- The bonds offer significantly higher yields compared to government bonds and bank deposits.
- Sales of corporate bonds to retail investors are on track to surpass last year's record.
- Rising interest rates and inflation are driving demand for higher-yielding assets.
- Some companies are using themed bonds or lotteries as incentives for investors.
Japanese retail investors are increasingly turning to corporate bonds, attracted by higher yields compared to traditional savings accounts and government debt. Companies like SoftBank Group and Rakuten are seeing booming demand for their offerings, with sales on track to surpass last year's record.
The shift is driven by a combination of persistently low bank deposit rates, rising inflation, and the attractive coupon rates offered by corporate issuers, which can be nearly triple that of government bonds. For instance, SoftBank is offering up to 3.34% on five-year notes, while Rakuten offered 3.3% on two-year notes.
This trend is particularly notable as Japan's major stock indexes trade at record highs, but with significant volatility. Many retail investors, like Koji Ota and Kyoko Takahata, view bonds as a safer alternative to stocks, providing predictable income and principal return.
To further entice investors, some companies are employing unique strategies. Keio Corp. is offering a lottery for prizes including hotel stays and dining experiences, while Rakuten has utilized a character-based theme for its 'Rakuten Cardman Bond'. However, concerns have been raised about potential irregularities in bond selling practices, such as brokerages overstating demand to issuers.
With Japanese households holding substantial financial assets, the corporate bond market presents a significant funding opportunity for companies seeking to diversify their financing sources.