Japan debt agreements affected as tariffs hit deals outlook across Asia
Three Japanese companies have postponed the sale of 100 billion yen ($678.43 million) worth of yen-denominated bonds in the wake of global financial market volatility induced by US tariff announcements, according to a source and the companies.
Japan's largest Asahi, was due to issue 50 billion yen ($340 million) this month but shelved the issuance due to market turmoil, a company spokesperson said.
Suntory Holdings deferred the issuance of 10 billion yen in subordinated bonds whose pricing was planned for this week, a spokesperson said.
Nissin also said it has postponed a planned bond issuance but declined to comment further. The noodle maker was due to issue bonds worth 40 billion yen, according a source familiar with the matter.
The three Japanese debt deals were shelved as financial markets grapple with the global fallout from US President Donald Trump's tariffs which investors fear could spark an all-out trade war and a deep recession.
Asian stocks bounced on Tuesday off more than one-year lows and US stock futures rose, but investors remained on edge even as they hoped Washington might be willing to negotiate some of the aggressive tariffs that have unleashed turmoil in markets.
Since the fresh tariffs were unveiled last week, the yield on benchmark 10-year Japanese government bonds dived as much as 36 basis points to hit a three-month low of 1.125% on Monday, but bounced back to 1.26% in the latest session.
Despite the market uncertainty, Warren Buffett's Berkshire Hathaway Inc began marketing a 7-tranche yen denominated bond on Tuesday, according to a term sheet reviewed by Reuters.
MARKET VOLATILITY: The market volatility is expected to have an impact on capital raising deals across Asia as investors navigate the risk of tariffs increasing already high geopolitical tensions between the US and China, according to bankers and lawyers that participate in the capital markets.
South Korea's Hanwha Aerospace said on Tuesday it would reduce the size of its planned capital raising by one third after it faced investor and regulatory pushback to the plan.
In Hong Kong, two initial public offerings are in the middle of book-building with Duality Biotherapeutics aiming to raise up to $200 million and Jiangsu Zenergy Battery Technologies Group aiming for a $130 million deal.
As those two transactions are expected to be a test of investors' appetite to buy China-related new share sales, advisors are pessimistic that big ticket deals would launch any time soon as markets remain fractured.
The effects of the tariffs on deals is being felt globally , with initial public offering and major corporate buyout activity expected to be on hold in the near term future.
'I think issuers shall remain on the sidelines for now. The clarity that's needed is about an eventual trade agreement between the two economic giants,' said Manishi Raychaudhuri, a former Hong Kong-based equity strategist and now chief executive of Emmer Capital.
'As long as retaliatory counter-punches keep on getting thrown around, it would be very difficult for investors to come to a conclusion about growth projections, cost of capital and fair valuations.' In Southeast Asia, the tariff fallout is being felt in merger and acquisition circles with at least one transaction being put on hold.
Navis Capital Partners had hired advisors to explore the potential dual exit either through a direct sale or Hong Kong IPO of Singapore-based container depot operator EKH, or Eng Kong, but the process could be paused in view of the current uncertain global macroeconomic environment triggered by tariffs and trade war, according to two persons with knowledge of the matter.
Navis Capital declined to comment and EKH did not respond to a request for comment. The sale could value EKH at more than $200 million, one of the sources added.
Japanese investors turned net sellers of overseas bonds in March for the first time in three months, fuelled by a decline in US yields, but they ramped up purchases of foreign equities, aided by retail investment flows.
Japanese investors sold 902.7 billion yen ($6.14 billion) in long-term foreign bonds in March, reversing February's net purchases of 3.3 trillion yen, data from the finance ministry showed.
They bought a net 2 trillion yen worth of foreign stocks last month, the highest on records, the data showed.
Investment trust management firms bought 1.11 trillion yen in foreign stocks, while trust accounts acquired 763.8 billion yen, ending a six-month selling streak.
Life insurers continued divesting, offloading 391.4 billion yen in foreign equities for a third consecutive month.
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