This month is such a difficult time for the Japanese domestic bond market, many undersubscribed deals continue to surge. One of the reasons leading to this situation is because the electric power companies decrease bond selling although they could meet the targets. Plus, there is also volatility especially in the government bonds. This becomes the reason why there is a decrease in demand for corporate issues. Then the supply in power companies is heavier so it could weigh the market even more.
The epitome would be, J-Power has raised ¥23.9bn from the planned ¥30bn three-year bond sale. Meanwhile, Hokuriku Electric Power drew around ¥16.6bn for a three-year tranche. Furthermore, there is also a 10-year portion having increased probability for around ¥20bn and ¥10 bn. Other companies like Chugoku Electric Power as well as Chubu Electric Power are having different scenarios. Chugoku Electric Power has finally attracted ¥14.6bn demand for a three-year bond offering, This is actually lower than the firm’s goal.
Chubu Electric Power signed a 10-year deal for ¥9.2bn. The company’s plan was around ¥10bn. However, there is undersubscribed deals looming in the electric power companies. This actually gives direct impact to industries like Kawasaki Heavy as well. The firm was actually planning to purchase its green bond for as much as ¥10bn in the 10-year segment. However, the demand is below it which was ¥9bn only.
Investors are showing less interest due to the oversupply in the electric power companies. Based on DealWatch, the company issued around ¥1.0879trn of bonds in the April to June quarter. Previously, they issued the previous fiscal year.