Definition
A Samurai bond is a bond issued in Japan by a non-Japanese entity and denominated in Japanese yen (JPY). These bonds provide an avenue for foreign firms to attract investment from Japanese investors. Samurai bonds, like Yankee bonds in the U.S., enable issuers to diversify their investor base and tap into the Japanese capital markets.
Examples
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Ford Motor Co.
- In November 2019, Ford Motor Co. issued Samurai bonds amounting to ¥15 billion (approximately $138 million) to diversify its funding sources and expand its presence in Asia.
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Coca-Cola
- In July 2014, Coca-Cola issued ¥150 billion ($1.47 billion) in Samurai bonds, taking advantage of low interest rates in Japan to refinance its existing debt.
Frequently Asked Questions (FAQs)
Q: Who can issue Samurai bonds?
A: Any non-Japanese entity, including multinational corporations or governments, can issue Samurai bonds to raise capital in Japan.
Q: What are the benefits of issuing Samurai bonds?
A: Issuing Samurai bonds allows foreign issuers to access the large and liquid Japanese capital market, diversify their investor base, and potentially take advantage of lower interest rates in Japan.
Q: Are Samurai bonds different from other foreign bonds?
A: Yes, while all foreign bonds are issued in a country by a non-native issuer, what sets Samurai bonds apart is that they are specifically issued in Japan and denominated in Japanese yen.
Q: What are the risks associated with Samurai bonds?
A: Like all bonds, Samurai bonds carry interest rate risk, credit risk, and currency risk. The latter is particularly pertinent, as fluctuations in the Japanese yen could impact the returns for investors from different currency zones.
Q: How do Samurai bonds compare to Yankee bonds?
A: Both are foreign bonds issued in the local currency of the host country; Samurai bonds are issued in Japan in Japanese yen, whereas Yankee bonds are issued in the United States in U.S. dollars.
Related Terms
- Yankee Bond: A bond issued by a foreign entity in the United States and denominated in U.S. dollars.
- Eurobond: A bond issued in multiple countries and denominated in a currency other than that of the country where it is issued.
- Bulldog Bond: A bond issued in the United Kingdom by a non-British entity and denominated in British pounds.
Online References
Suggested Books for Further Studies
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“The Bond Book” by Annette Thau
- A comprehensive guide on bond investments, offering insight into different types of bonds including Samurai bonds.
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“Fixed Income Securities” by Bruce Tuckman and Angel Serrat
- A fundamental text that explains the principles and concepts behind all types of fixed-income securities.
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“Bond Markets, Analysis, and Strategies” by Frank J. Fabozzi
- This book provides an in-depth understanding of bond markets, including international bonds like Samurai bonds.
Accounting Basics: “Samurai Bond” Fundamentals Quiz
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