Japanese companies have sold the highest amount of convertible bonds in more than two decades in the first half, turning to the cheaper financing alternative as interest rates continue to climb.
These companies issued ?1 trillion ($6.2 billion) of the debt-equity hybrid, which can be sold to investors at lower coupons by enticing them with the possibility of higher returns if stock prices go up. That was the highest tally for the first half since 2004, fueled by large deals such as Nippon Steel¡¯s ?600 billion sale ¡ª which was the biggest ever Japanese convertible bond issue ¡ª and JX Advanced Metals¡¯ ?250 billion offering.
The surge comes after the Bank of Japan ended years of negative interest rates in 2024. In June, the central bank raised its benchmark interest rate to 1%, the highest level since 1995, and signaled more hikes lie ahead. The 10-year government bond yield is now hovering around its highest level since 1996.
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