A Japanese government organization was massively oversubscribed for a bond yielding 0.0000148% as investors scramble for safe assets
- Japan Student Services Organization, an agency that offers student loans, has seen rising demand for its two-year social bonds during the coronavirus pandemic, according to Bloomberg.
- Despite Japan’s consistent pumping of stimulus funds to revive the economy, investors are still looking to explore returns from bonds offering negligible returns.
- JASSO priced $278 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.
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Investors in Japan are scouting for safe debt amid the coronavirus pandemic even if it pays them a smidgen.
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 ($278 million), offered by Japan Student Services Organization (JASSO), is priced at 100.002 yen ($0.93) 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.
The organization has history in pricing extremely low-yield debt. It sold Japan’s first negative-yielding agency bond in 2019 when it sold a note priced at 100.003 yen ($0.93) 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 finalize a fresh coronavirus stimulus package worth 100 trillion yen ($930 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 ($988 billion) package last month.