Amid ultralow interest rates, corporations favor bonds to boost ROE

Japanese corporate managers have learned to move away from stocks and embrace debt for fundraising.   © Reuters

TOKYO — During the first half of the Japanese fiscal year, the value of new shares entering the open market here tumbled 80% from a year earlier, underscoring the pivot toward low-interest debt as a fundraising scheme.

A total of 139.7 billion yen ($1.29 billion) worth of new shares were floated between April and September, data from Tokyo-based I-N Information Systems shows. The sum is the lowest for any year since 1992, around when Japan’s economic bubble burst. Much of the funding was raised by startups.

Meanwhile, major businesses have largely relied on corporate bonds, thanks to cheap procurement costs afforded by the Bank of Japan’s negative interest rate policy. About 8.7 trillion yen worth of debt was issued between April and September, up 55% from a year ago to mark a new record for the period.


Both Takeda Pharmaceutical and tech conglomerate SoftBank Group raised 500 billion yen apiece through bonds, with each float vying as the biggest one-time debt sale in Japanese corporate history.

During the bubble period, annual public offerings routinely swelled to roughly 5 trillion yen. Businesses back then regarded stock floats as “no-cost funds,” since shares do not have to be paid back.

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