A Japanese company was massively oversubscribed for a bond yielding 0.0000148% as investors scramble for safe assets

ReutersA man wearing a protective face mask walks past a screen showing Nikkei index in Tokyo
  • Japan Student Services Organisation, an agency that offers student loans, has seen rising demand for its two-year social bonds during the coronavirus pandemic, according to Bloomberg.
  • JASSO priced $US278 million worth of two-year social bonds on Friday offering a near-zero yield, however orders for the bond totaled about two and a half times the amount sold.
  • JASSO, an independent administrative institution that offers student loans, has seen rising demand for its AA+ rated securities by investors keen to boost their holdings in Environmental, Social, and Governance (ESG) assets.
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Investors in Japan are scouting for safe debt amid the coronavirus pandemic even if it pays them barely anything.

One such contender that drew attention came from strong demand for a bond offering a 0.0000148% yield, according to a Bloomberg report Monday.

The two-year social bonds worth 30 billion yen ($US278 million), offered by Japan Student Services Organisation (JASSO), is priced at 100.002 yen ($US0.93) with a coupon rate of 0.001% – essentially offering a near-zero yield.

Orders for the bond were two and a half times the amount that was being sold, Bloomberg said, citing sources.

JASSO’s debt deal history is noteworthy. Aimed at projects with positive social outcomes, its social bonds are a type of security instrument where the proceeds are exclusively meant to raise funds for social projects.

JASSO, an independent administrative institution that offers student loans, has seen rising demand for its AA+ rated securities by investors keen to boost their holdings in Environmental, Social, and Governance (ESG) assets.

Its buyers include banks, pension funds, foreign investors, and Shinkin banks (regional financial institutions), Bloomberg reported, citing sources.


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The organisation has history in pricing extremely low yield deb. It sold Japan’s first negative-yielding agency bond in 2019 when it sold a note priced at 100.003 yen ($US0.93) with a coupon rate of 0.001%.

The yield turned out to be around minus 0.0005%.

Japan is among the first countries to relax lockdown restrictions. Prime Minister Abe Shinzo lifted its state of emergency on Monday after a marked decrease in new coronavirus cases in Tokyo and other hard-hit provinces.

According to Nikkei, the Japan government is planning to finalise a fresh coronavirus stimulus package worth 100 trillion yen ($US930 billion) to support companies and employees affected by the Covid-19 outbreak. This would be the second round of aid relief after the country passed a record 108 trillion yen ($US988 billion) package last month.


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