Nomura Holdings was barred as lead manager for several yen bond deals after authorities found violations of market rules. This was the second time this year that Japanese companies canceled their contracts with insurers due to violations.
At least four Japanese companies, including Toyota Finance, Sumitomo Mitsui Trust Holdings and Okinawa Development Finance, have axed the country’s largest brokerage as bond manager following the development, according to announcements from underwriters. Japan’s securities watchdog said it had investigated Nomura for suspected market manipulation in government bond futures and found violations.
Shares of Nomura tumbled as much as 7.9% on Monday morning amid a broad sell-off in Japanese stocks, with the Topix index down as much as 3.8%. Shigeru Ishiba’s victory for the leadership of the ruling Liberal Democratic Party rattled investors who had been betting on a boost from more monetary stimulus from his rival.
Regulatory issues have prompted Japanese companies in the past to remove brokers from debt underwriting mandates. Almost no Japanese companies hired Mitsubishi UFJ Morgan Stanley Securities for yen bond trades for several months after regulators punished the firm earlier this year for breaching information firewalls, data compiled by Bloomberg show.
Nomura’s resignation as underwriter comes at a busy time for yen corporate bond deals. Sales of such notes have already reached a record high of more than ยฅ10 trillion ($70 billion) in the first half of the budget that started in April. The coming months are generally a busy time for brokers in the primary yen market.
Hokkaido Electric Power last week dropped Nomura as manager of yen transition bonds.
