Mitsubishi UFJ Financial Group Inc. (8306) is seeking to regain the top spot in Samurai bond underwriting next year by hiring bankers and encouraging staff at its partner Morgan Stanley to attract more foreign issuers of yen debt.
Mitsubishi UFJ Morgan Stanley Securities Co., the joint venture between Japan’s biggest bank and the Wall Street firm, will hire “several experienced bankers” in Tokyo next year, said Hajime Suwa, head of debt capital markets. It is also pitching companies, banks and government agencies in the U.S., Europe and Asia to issue yen bonds, he said.
The company, the No. 1 manager of bond sales in Japan this year, ranks sixth for Samurai issuances and last held the top spot in 2009, the year before it formed the investment banking venture with Morgan Stanley. (MS:US) Suwa said he will focus on securing deals with foreign financial firms after banks were the six biggest issuers of yen debt in 2012.
“We’re having a tough time with the Samurai business,” Suwa, 46, said in an interview on Nov. 30 in Tokyo. “We’ve been lagging behind in obtaining business from financial institutions, which are the dominant issuers in the market.”
Suwa said the firm has begun hiring from local and overseas firms. He declined to say how many bankers he plans to recruit or give the number of current staff working on Samurai debt.
Tokyo-based Mitsubishi UFJ ranks sixth among arrangers of yen debt sales for overseas issuers in 2012, down from third in 2011, second in 2010 and first in 2009, according to data compiled by Bloomberg. Nomura Holdings Inc. (8604) is the top Samurai underwriter this year, arranging 35 transactions valued at 350.2 billion yen ($4.3 billion), followed by Mizuho Financial Group Inc. (8411) and JPMorgan Chase & Co., the data show.
JPMorgan, Nordea Bank AB, Westpac Banking Corp., the Republic of Turkey, Goldman Sachs Group Inc., Shinhan Financial Group Co. and Renault SA are among 25 issuers that sold 1.9 trillion yen of Samurai bonds in 2012, the data show. That’s down 11 percent from the same period last year as European issuances fell amid the region’s sovereign debt crisis.
Suwa said he plans to increase travel to the U.S., Europe and Asia by his Tokyo bankers to drum up business. They will work more closely with Morgan Stanley counterparts abroad as well as Mitsubishi UFJ bankers stationed overseas, he said.
“Investors’ appetite for Samurai bonds is growing,” Suwa said. “Professional investors are shifting their focus to Samurais from Japanese corporates” as they offer a better yield, he said.
Samurai bonds yielded an average 0.96 percent on Dec. 3, or 0.3 percentage point higher than domestic corporate notes, according to Bank of America Merrill Lynch index data. Samurais returned 4.7 percent this year, versus a 1.4 percent gain on Japanese corporate bonds, the data show.
Some overseas enterprises that operate in Japan want to raise funds in the Samurai market to increase their presence in the country and diversify risk, Suwa said, without naming the companies he is approaching.
France Telecom SA (FTE), the country’s biggest phone company, and KT Corp. (030200), South Korea’s second-largest mobile carrier, have registered to sell Samurai debt.
Signs are emerging that demand is reviving for yen debt at European banks. Societe Generale SA tapped the market last month after delays in 2008 and 2011, issuing 70 billion yen of Samurai notes in a sale partly managed by Mitsubishi UFJ Morgan Stanley. Deutsche Bank AG (DBK), BNP Paribas SA and Credit Suisse Group AG have registered to sell yen securities, according to filings with Japan’s Ministry of Finance.
“We’ll make a fresh start by boosting our focus on Samurais,” Suwa said.
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