(Bloomberg) — The Tokyo Metropolitan Government is planning to cut bond sales this fiscal year, in another sign that Japan’s credit market is bracing for weaker investor demand for debt after the central bank raised interest rates.
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Tokyo, one of Japan’s biggest issuers of municipal debt, is reducing its planned public bond sales in the year started April 1 to about ¥470 billion ($3.2 billion) from the previous plan of around ¥520 billion. It cited factors including recent interest-rate fluctuations, the burden of interest payments and funding needs.
Bond underwriters say that sales of Japanese corporate notes will likely slow in the coming months because volatility in the nation’s credit market will weigh on investor demand for the securities. Tokyo’s reduction plan shows that even a highly rated issuer like it, with an A+ grade from S&P Global, the fifth-highest score, may be preparing for less demand from debt investors.
The Bank of Japan’s July 31 rate hike unleashed higher volatility in markets, with the 10-year government bond yield plummeting the most since 1999 last week, Japanese equity benchmarks sustaining their worst falls since 1987 and the yen rebounding sharply.
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