A samurai bond is a Japanese yen-denominated bond issued in Tokyo by a non-Japanese company. Samurai bonds are governed by Japanese law and are subject to Japanese taxation. The issuer of a samurai bond is typically a foreign company looking to raise capital in the Japanese market.
Samurai bonds were first introduced in 1961. The name "samurai" bond is derived from the fact that, historically, only Japanese citizens were allowed to own Japanese government bonds. Samurai bonds are issued in Japanese yen and are therefore subject to Japanese interest rates and Japanese taxation.
Samurai bonds are typically issued with maturities of five to 10 years. Interest payments on samurai bonds are made semiannually. At maturity, the principal amount of the bond is repaid to the investor in Japanese yen.
Samurai bonds offer foreign issuers a way to tap into the large and liquid Japanese bond market. Samurai bonds also give Japanese investors the opportunity to invest in foreign companies and earn a higher yield than they would on Japanese government bonds.
The main risk associated with samurai bonds is currency risk. If the Japanese yen weakens against the issuer's home currency, the issuer will have to pay more yen to repay the bond at maturity. Conversely, if the Japanese yen strengthens against the issuer's home currency, the issuer will receive less yen at maturity.
Another risk associated with samurai bonds is interest rate risk. If Japanese interest rates rise, the value of existing bonds will fall and the issuer will have to pay more interest on the bonds. Conversely, if Japanese interest rates fall, the value of existing bonds will rise and the issuer will pay less interest on the bonds.
Finally, there is credit risk associated with samurai bonds. The issuer's creditworthiness will affect the bond's price and interest rate. A bond with a higher interest rate will be more expensive and will be more risky for the issuer.
Despite the risks, samurai bonds can be a good way for Which bonds are issued in Japan? Bonds are issued in Japan by the government, municipalities, and companies. The majority of bonds are issued by the government.
The Japanese government issues two types of bonds:
1) Government bonds: These are issued by the Ministry of Finance and are used to finance the government's deficit.
2) Treasury bills: These are short-term bonds with maturities of one year or less. They are issued by the Ministry of Finance and are used to finance the government's short-term cash needs.
Municipalities in Japan also issue bonds to finance their activities. These bonds are called "municipal bonds."
Companies in Japan may issue bonds to finance their operations or to raise capital. These bonds are called "corporate bonds."
Who holds Japanese debt? The Japanese government is the single largest holder of its own debt, with over ¥1 quadrillion ($10.4 trillion) in Japanese government bonds (JGBs) outstanding as of March 2021. The Bank of Japan (BoJ) is the second largest holder, with ¥541 trillion ($5.2 trillion) of JGBs on its balance sheet. Japanese banks are the third largest holder, with ¥341 trillion ($3.3 trillion) of JGBs. Japanese life insurance companies and pension funds are the fourth and fifth largest holders, with ¥270 trillion ($2.6 trillion) and ¥217 trillion ($2.1 trillion) of JGBs, respectively. Non-Japanese investors, including central banks and sovereign wealth funds, hold ¥165 trillion ($1.6 trillion) of JGBs.
What is a kangaroo bond? A kangaroo bond is a bond denominated in Australian dollars and issued by a non-Australian entity. Kangaroo bonds are typically issued by banks, corporations, and supranational organizations. The term "kangaroo" refers to the fact that these bonds are typically issued in Australia, although they may be issued in other countries as well.
Kangaroo bonds typically have maturities of five to ten years. Interest on kangaroo bonds is usually paid semi-annually, although some bonds may have interest payments that are made annually or quarterly.
The Australian dollar is a popular choice for kangaroo bonds because it is a stable currency. In addition, the Australian dollar is a commodity currency, which means that it is linked to the prices of commodities such as gold, oil, and copper. This makes kangaroo bonds an attractive investment for investors who are looking to diversify their portfolios.
Kangaroo bonds are typically issued in the primary market, which means that they are sold directly to investors by the issuer. However, kangaroo bonds can also be traded in the secondary market. Who holds Japanese bonds? Japanese bonds (referred to as "JGBs") are primarily held by Japanese investors, including banks, insurance companies, pension funds, and other institutional investors. The Japanese government is the largest issuer of JGBs, and most of the bonds are sold through auctions. What is the interest rate of bonds usually called? The interest rate of bonds is usually called the "coupon rate."