Coupon secures Renault huge volatility in the Yen market. The company has raised $597m from the three-year Samurai bond offering. The rate of the senior unsecured bond A-/A- (R&I/JCR) purchased a coupon of 3.5% on Friday. The estimation of the Tonar is the three-year Tonar mid-swaps as the quote is at 0.12% from the spread is 338bp. According to IFR Asia, this kind of coupon is an eye-watering coupon. This is because of the Japanese standards leaving investors incredulous.
A banker close to the deal argues that the feedback from client was ‘is this really a bond and whether or not this is accurate. However, a banker who is not in the deal argues that the coupon in short term maturity is interesting. It somehow leads to the investors interest even during the volatility. This sale was smaller than the Renault deal when the price was larger ¥150bn across two and three-year bonds.
JGBs’ similar maturity trading was around -0.045%. Although the coupon is really interesting, the bond price was in line with the issuer’s euro secondary market curve. This information is based on the banker away from the deal. Compared to a year ago, the size was smaller than Renault’s deal a year ago when the proceeds were larger than ¥150bn .
However, Renault-Nissan-Mitsubishi-Alliance, the French carmaker, was able to create more demands from life insurers. Furthermore, they could gain demands from asset management firms, regional accounts, including corporate investors as the main buyers. However, bankers argue that it does not have implications for the Yen market. Few are even offering coupons and market participants flock in distorted JGB yield curves.