Yomiuri Shimbun Staff Writers
Japan's retail corporate bond market is now expanding, as exemplified by SoftBank Group Corp.' s announcement that it will issue retail bonds totaling 1 trillion yen soon.
With supply and demand currently in balance, companies are increasing their issuance of retail bonds to invest in growth areas, and rising interest rates have made it possible for individual investors to expect a certain yield. Bonds of this type are attracting attention as a relatively stable way to manage assets compared to investments like stocks.
SoftBank Group plans to "aggressively" allocate funds raised through the bond issuance to AI and other growth investments, Chief Financial Officer Yoshimitsu Goto told The Yomiuri Shimbun.
Goto added that the company will focus particularly on investing in physical AI systems, in which AI models autonomously control robots and other physical machinery.
Of the 1 trillion yen to be raised in the offering, SoftBank Group plans to allocate 600 billion yen to AI-related investments. The company also aims to build up its cash reserves in preparation for future investment opportunities, giving it the flexibility to deploy funds whenever necessary.
Corporate bonds are securities that companies use to borrow funds directly from investors. Compared to bank loans, they typically offer longer repayment terms and enable firms to raise larger amounts of capital at one time.
SoftBank Group has leveraged its brand power to make retail bond issuance a key method for raising funds. The company has issued retail bonds 24 times since fiscal 2005 (which ended March 2006), totaling 10.6 trillion yen. The cumulative number of bond holdings stood at 980,000 as of June 30 of this year.
Issuance volume up 150% in five years
In fact, the number of companies issuing retail bonds in Japan is generally increasing. In March, Tokyu Fudosan Holdings Corp. issued retail bonds for the first time in its history, totaling 10 billion yen. French auto giant Renault SA issued yen-denominated retail bonds totaling 100 billion yen in June.
According to Nomura Securities Co., retail corporate bonds issued in Japan in fiscal 2025 totaled 2.82 trillion yen, up about 150% from five years prior. The figure for fiscal 2026 had already exceeded 1.4 trillion yen as of Friday. SoftBank Group's 1 trillion-yen bond issue is planned for September, so it is likely that the total issuance for this fiscal year will exceed that of the previous year.
"In the past, the range of retail corporate bond products was limited mainly to certain high-yield issues, because interest rates were too low," said Kazuma Ogino of Nomura Securities. "Now, however, corporate bonds are gaining attention as a reliable way to secure stable yields."
For companies, rising interest rates mean higher interest payment burdens, but they expect to recoup those costs through profits made by allocating funds to capital investment.
Corporate capital investment has been robust in Japan. According to Cabinet Office data on machinery orders, the total value of orders made in June reached 4.43 trillion yen, up 0.4% from the previous month. The figure is the highest since comparable data became available in April 2005.
The Japanese government is also working on developing the corporate bond market. In July, the Cabinet approved a national growth strategy which stipulated measures to activate the market, such as deregulation to encourage the issuance of low-rated corporate bonds.
"Amid a public trend of shifting from savings to investment, corporate bonds will be a good option for investors as a medium-risk, medium-return product that does not require taking on as much risk as stocks," said Yuki Seto of Daiwa Institute of Research Ltd.
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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.
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