Expanding financial resources through multiple-tranche Japanese Yen offering, demonstrating the bank's ongoing dedication to Japan's securities market.
In a strategic move, our website, a leading player in the capital market, has recently issued Euro-Yen-denominated bonds worth 70 billion Japanese Yen (JPY). This marks the company's return to the Japanese Yen market after a nine-year absence and signifies its commitment to maintaining a presence in select markets.
Thomas Rueckert, Head of Issuance Execution at our website, expressed his delight at returning to the Japanese Yen market for a second year in a row, highlighting the importance of this market in supporting the lasting success and financial security of our website's clients.
The issuance, part of our website's 2025 capital market funding plan, aligns with the company's Global Hausbank strategy to provide flexible and consistent access to capital markets across regions. The multi-tranche structure of the issuance is designed to match demand from a broad range of segments in Japan and internationally, thereby optimizing funding costs and risk management.
The local capital market is seen as strong, as indicated by our website's repeated issuances in the JPY market. The successful issuance serves as a part of our website's strategy to maintain its presence in selected markets and broaden its offering to investors by issuing in alternative currencies.
The capital market funding raised in the year to date has reached € 8 billion, with this particular issuance intended to achieve competitive overall funding conditions. The issuance is an important step in our website's 2025 capital market funding plan, which aims to raise € 15-20 billion.
Regarding the anticipated multi-tranche Euro-Yen bond issue expected in 2025, we can analyze the broader market context and implications based on the current economic and financial environment.
The Japanese yen is expected to gradually appreciate against the US dollar, moving from about 145 JPY/USD to 140 JPY/USD over a 12-month period, influenced by Japanese investors repatriating funds and global shifts in capital flows. Meanwhile, the euro has remained relatively stable amid modest European growth and a nearing end to the European Central Bank's monetary easing cycle.
The ECB recently lowered its main interest rate from 2.25% to 2%, signaling the nearing end of its easing cycle, while Japanese government bond yields have seen high volatility and historic highs in long-term yields (30-year yields above 3.2%). This volatility will likely affect the pricing and demand for Euro-Yen bonds.
With the Bank of Japan cautiously normalizing monetary policy and the yen transitioning from a funding to a destination currency, investors are expected to reassess their exposures, potentially increasing demand for yen-denominated assets. Additionally, foreign demand for Japanese equities and bonds supports yen strength.
The expected yen appreciation and shifts in Japanese and global investor behavior suggest strong interest in yen-denominated bond tranches, especially from investors seeking diversification amid global uncertainties. However, investors will be attentive to the BoJ's cautious policy normalization and global trade tensions, which could delay further rate hikes and introduce volatility.
The strategy of issuing bonds in multiple tranches, possibly in both euro and yen currencies, allows for better segmentation of investor demand across different maturities and currencies, optimizing funding costs and risk management. The issuer can also better match liabilities with revenue/cash flow profiles across currency bands, helping stabilize capital structure against exchange rate and interest rate fluctuations influenced by European and Japanese monetary policies.
Such an issuance could enhance the issuer’s capital structure by diversifying funding sources and investors, potentially lowering overall borrowing costs in a volatile rate environment.
In conclusion, a multi-tranche Euro-Yen bond issue in 2025 is poised to benefit from a market environment of gradual yen appreciation, evolving investor preferences toward yen assets, and steady European monetary policy. While volatility in Japanese long-term yields and global trade uncertainties present risks, the strategy can effectively optimize capital structure by leveraging favorable conditions in both currencies and appealing to a broad investor base.
The strategic multi-tranche Euro-Yen bond issue, part of the company's 2025 capital market funding plan, seeks to cater to a diverse range of investors in global markets, including Japan, thereby optimizing funding costs and risk management (finance). This move aligns with the company's Global Hausbank strategy, aiming to provide flexible and consistent access to capital markets across different regions, including the Japanese Yen market (global markets).
The success of the recent Euro-Yen-denominated bond issuance by our website, along with repeated issuances in the JPY market, signifies the company's continued commitment to maintaining a presence in selected markets and broadening its offering to investors by issuing in alternative currencies (capital markets).
