Focused under stress
In a difficult year for the yen market, one house stood out for its ability to deliver funding for both international and domestic issuers. For adapting as needed and supporting its clients, Mizuho Securities is IFR’s Yen Bond House of the Year.
Mizuho Securities focused its efforts in 2020 on supporting the yen bond market through a challenging time. It helped global issuers minimise risks in a volatile period and helped Japanese borrowers access essential funds in response to the coronavirus crisis.
The international yen bond market made a quiet start to the year 2020 because the pricing levels the market was able to offer to foreign issuers were already less favourable than in the US dollar and euro markets. The onset of the Covid-19 pandemic only worsened those dynamics, as central banks responded by slashing rates and injecting liquidity to support ailing economies.
"Our goals were to revive the market and play a leading role, not to close the door for first-time issuers, and help our clients to respond to the coronavirus crisis," said Masaya Mizobuchi, head of global debt capital markets at Mizuho Securities in Tokyo.
The theme of the year was all about adapting to new conditions.
In March, to minimise market risk at the height of the sell-off, Mizuho managed to shorten the marketing period on Aflac's ¥57bn (US$549m) four-tranche global yen bond to 1.5 days, about half the usual time.
Mizuho also worked hard to deliver a jumbo offering for Berkshire Hathaway in early April, having convinced Warren Buffett’s conglomerate that the market could support another sizable deal after its ¥430bn fundraising in 2019. By announcing the deal well in advance, Mizuho helped deliver a ¥195.5bn transaction even though a state of emergency was declared in Japan during the marketing period.
The purpose of the fundraising was never disclosed, but Berkshire later revealed that it had amassed stakes in Japan’s five biggest trading companies, worth a combined US$7bn.
Once the markets began to find their feet, Mizuho was able to introduce first-time issuers to the Japanese investor base. It helped Swedbank make its debut in the yen market with a ¥21bn dual-trancher in June, before arranging a debut deal from Singapore-based property investor GLP with a unique credit-enhancement scheme, potentially helping other Asian borrowers to tap the yen market in the future.
GLP raised ¥15.4bn in December with a guarantee from Credit Guarantee and Investment Facility, a bond insurer set up by the Asian Development Bank and the Asean+3 governments. To underline the extent of the challenge of introducing new products to Japanese investors, pricing had to be delayed by a few days and final guidance came outside of out of the initial price range, but the nine-year Pro-bond did achieve the target amount.
Mizuho also actively helped domestic borrowers, especially those who were fighting the effects of Covid-19. Aeon Mall used part of the proceeds from a ¥30bn sustainability bond to assist its tenants and buy masks, sanitisers and partitions for its malls. Medical device manufacturer Nipro also used part of the proceeds from a ¥50bn social hybrid bond to make surgical masks and rubber gloves.
It was also an urgent task for banks to help domestic railway companies raise funds to make up for a drop in passenger traffic. Mizuho helped the rail operators sell three-year notes, targeting the sweet spot to take advantage of expanded corporate bond purchases by the Bank of Japan.
Notably, Mizuho came to the aid of another virus-hit transporter when Japan Airlines sold ¥20bn of dual-tranche bonds at the end of Japan's fiscal year in March. Mizuho was one of the underwriters of the 20-year tranche.
Mizuho also played a big role in the biggest and most ambitious domestic deals, such as Asahi Group's ¥750bn-equivalent debt and equity refinancing of loans for its acquisition of Anheuser-Busch InBev's Australian business. Mizuho was one of the biggest underwriters of the yen hybrid bond tranche. It also helped distribute NTT Finance's record-breaking ¥1trn four-part domestic deal.
To see the digital version of this report, please click here
To purchase printed copies or a PDF of this report, please email gloria.balbastro@lseg.com
