Global financial institutions are beefing up their debt capital market teams in Japan, hiring bankers and relocating staff, to capture a boom in fundraising driven by mergers, acquisitions, and artificial intelligence capital.
In July, Goldman Sachs Securities hired Dai Kitatani, former head of debt capital markets at Citigroup Global Markets Japan, as head of DCM operations, and UBS Securities appointed Takehiro Sakuramoto, formerly of Goldman Sachs, as its first dedicated DCM head in four years.
At UBS, the DCM head role had been held concurrently by a banker covering financial institutions for the past four years. Sakuramoto’s appointment marks the return of a dedicated DCM head as the firm steps up its focus on debt capital markets.
The moves underscore how global banks are using their international distribution networks to capitalize on the growing funding needs of Japanese companies.
“Foreign-currency bond issuance by Japanese companies is increasing, including from debut issuers, and I expect that trend to continue,” said Goldman’s Kitatani. Such issuance tends to be more expensive than domestic bonds after the proceeds are swapped back into yen, but overseas markets can absorb larger deals, making some issuers more willing to accept the higher funding cost, he said.
Sales of foreign-currency debt by domestic companies reached about $91.8 billion in the first half of the fiscal year from April through September, surpassing the previous record of $75.1 billion set in the same period a year earlier, according to data compiled by Bloomberg.
Kitatani said Goldman plans to leverage its relationships with Japanese companies and use foreign-currency bond mandates as an entry point to win more lead-manager roles across its broader DCM business, including domestic bonds.
HSBC Securities, which has had a relatively limited presence in Japan’s corporate bond market, is adding staff and aims to leverage its network of Asian investors to win foreign-currency bond mandates from Japanese companies.
“We want to actively pursue foreign-currency bond deals by Japanese companies and other issuers by leveraging our strong relationships with Asian investors,” said Yasumasa Nakayama, head of debt capital markets in Japan for HSBC Securities.
Japan’s domestic corporate bond market has gotten busier, supported by booming corporate funding needs. Issuance in the first half rose 10% from a year earlier to a record ¥10.6 trillion ($67 billion). SoftBank Group Corp.’s ¥1 trillion retail bond sale in September and subordinated bond issuance by Japan’s megabanks helped boost the overall total.
The push to strengthen DCM operations goes beyond hiring new staff. Nomura Securities has created a new unit dedicated to corporate bond issuance, separating debt and equity underwriting functions, and strengthening its specialist DCM capabilities.
While Japanese companies are increasingly tapping overseas markets, foreign issuers are also turning to Japan’s yen market to diversify their funding sources and investor base. Google parent Alphabet Inc., for example, raised ¥576.5 billion in its debut yen bond offering in May, the largest-ever yen bond sale by an overseas issuer.