Japanese companies sold a record amount of yen-denominated bonds targeting individuals this year, in the latest sign that sticky inflation is causing households to shift more of their $14.3 trillion of financial assets into riskier investments.
The note sales climbed to about ?2.76 trillion ($17.6 billion) as of Dec. 10, surpassing last year¡¯s full-year record of ?2.73 trillion, according to compiled data. With one gauge of Japanese inflation expectations surging to the highest in more than two decades earlier this month, individuals are turning increasingly to investments that offer higher potential returns than the meager 0.2% paid on regular deposits by large banks.
Bank of Japan Gov. Kazuo Ueda has already said policymakers will consider raising interest rates at their upcoming meeting next week as the central bank gets closer to attaining its inflation target of 2% on a sustained basis. With consumers struggling with the most persistent inflation in a generation and searching for investment alternatives, more companies are seeking to tap into that demand by selling debt to individuals.
Supermarket chain Aeon debuted its first such bond this year, and railway operator Keio returned to the retail debt market for the first time in 31 years, data compiled by Bloomberg show.
¡°People are becoming acutely aware of the need to invest as they can no longer protect their assets with just deposits,¡± said Daisuke Sakamoto, deputy general manager at Mizuho Securities¡¯s product administration department. The combination of inflation, unimaginable during the deflationary era several years ago, and higher bond yields is driving increased interest in the retail debt, he added.
The average yield on corporate bonds in the Japanese currency hit the highest since 2008 this week at about 1.8%, according to a Bloomberg index, and some issuers such as SoftBank Group have sold retail notes this year with considerably higher coupons. SoftBank last month priced a ?500 billion bond maturing in 2032 that pays an interest rate of 3.98%.
Facing higher interest rates, companies are incentivized to issue bonds before borrowing costs rise further, according to Kazuma Ogino, senior credit analyst at Nomura Securities.
¡°Elevated funding needs are likely to continue in 2026 as companies target future earnings growth,¡± he said.
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