Yen Bond Market Instability Emerges as BOJ Policy Speculation Rises
• Speculation over BOJ tightening policy is exposing weaknesses in the yen bond market, where costs have stayed low.
• Investor demand is declining and volatility is causing issues like scrapped deals, as borrowers rush to issue debt before rates rise further.
• Sales of yen-denominated bonds have declined for 2 months straight, even as issuance hits record highs.
• Borrowers are now exposed to rate volatility, as more bonds are priced based on fluctuating sovereign yields rather than fixed coupons.
• At least 18 deals have been delayed or pulled due to market instability, highlighting challenges in the shifting landscape.