Corporate governance reforms, which have fueled a nearly $2 trillion (308 trillion yen) rally in Japanese stocks, are making credit more attractive to investors.
Japanese dollar-denominated corporate bonds are outperforming their U.S. counterparts, and borrowers have flocked to the market in recent months with record issuance. Improved governance scores are helping to shore up the country’s credit at a time when the economy has finally shaken off decades of deflation, allowing the Bank of Japan to move away from ultra-low interest rates.
“We are seeing a change in the economic environment and the corporate culture in Japan,” said Angus Hui, head of fixed income at Fullerton Fund Management in Singapore. While those developments initially focused on shareholders, they are also becoming a “pull factor” for credit investors, he said.
