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Abenomics Starts a Wave of Dollar Financing

Shizuoka Bank Ltd. (8355) joined Japanese national lenders in expanding U.S. dollar finance activity, anticipating monetary easing will crush margins on yen loans.

The nation’s second-biggest regional bank by market value raised $500 million in zero-coupon notes due 2018, the first public sale of dollar-denominated convertible bonds by a Japanese company since 2002. The average interest rate on long- term yen loans from the country’s lenders fell to 0.942 percent in February, compared with 3.348 percent companies worldwide pay on dollar facilities, according to data compiled by Bloomberg.

Mitsubishi UFJ Financial Group Inc. plans to increase energy and utility financing in the U.S., as the Bank of Japan (8301)’s focus on cutting long-term borrowing costs undercuts earnings from yen loans, President Nobuyuki Hirano said. Sumitomo Mitsui (8316) Financial Group Inc. aims to sell a record amount of dollar bonds this year for overseas business, even as the BOJ policy seeks to spur domestic lending to revive the economy.

“You know it’s a big deal when a conservative lender like Shizuoka Bank does this, a sure sign that yen debt is just not cutting it anymore,” said Nozomi Kokubun, a Tokyo-based analyst at SMBC Nikko Securities Inc. “Dollar-denominated loans are attractive for banks because they offer a spread you simply won’t find in Japan.”

Excess Cash…”

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