Japanese companies are increasingly turning toward convertible bonds as the prospects of a surge in fiscal spending and central bank rate hikes raise the cost of traditional debt instruments.
The benchmark 10-year bond yield hit 2.38% in January, the highest since 1999, as investors positioned for an election in which both sides pledged to ramp up government spending. With longer-term yields at levels unseen in decades, stocks have rallied after Prime Minister Sanae Takaichi¡¯s historic election victory, changing the calculus on corporate financing.
Investment bankers are betting that convertibles ¡ª bonds that can be exchanged into stock ¡ª will emerge as the big winners, with a banner year in 2026.
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