![]() ![]() ![]() That bond has ratings of Aa2 from Moody’s and AA- from S&P. The last Samurai issue was in January, when Australian lender Westpac sold a 85 billion yen five-year bond at 10bp over swaps. The yen to euro cross-currency basis swap is at negative 42bp mid at the five-year point, making it unattractive for the European banks that make up the bulk of the market. ![]() The Samurai market came to a standstill this year after a negative basis swap, the BOJ’s negative rate environment and robust US dollar and euro markets weakened the yen’s appeal as a funding currency. Change of heart Even if Japanese investors are reluctant to buy BBB rated and sub-investment grade credits from foreign Samurai sellers, the prospect of earning double-digit spreads may be hard to resist amid a dearth of supply. These levels were considerably wider than the spreads on the most recent Samurai issues, before the market stalled, which, at one point, saw deals price as tight as 1bp inside the benchmark rate. ![]()
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