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U.S. bonds hot in Japan
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September 10, 1996: 7:15 p.m. ET
Small investors bullish on overseas corporate bonds
From Correspondent Bill Dorman
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TOKYO (CNNfn) -- The Walt Disney Co. is trying to sell 50 billion yen ($455.16 million) of corporate bonds to Japanese investors -- and that's no Mickey Mouse offering.
McDonald's and IBM have gotten in on the action as well with their own Japanese bond placements.
Japanese investors are snapping up many such issues, choosing them over such traditionally popular investments as U.S. and German government bonds.
"It's a very good environment right now, because (bond issuers) can lock into the low yield structure in Japan," said Cameron Umetsu, a UBS Securities bond strategist. "And there's a very strong investor appetite."
One reason for the strong interest involves the small return available on Japanese domestic investments.
A standard Japanese bank account currently pays less than 1 percent in annual interest.
And from marketing to sales, a recent wave of corporate-bond issuers have aimed directly at Japan's small investors. Small players are also buying overseas government bonds.
But will the shopping spree last?
"This pace is probably going to continue at least until the Bank of Japan changes monetary policy -- at least throughout the fiscal year (that runs through next March 31)," predicted Yuichi Matsushita, senior strategist at Nikko Research Center.
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