First World Bank Bond Issued in Japan
2011 marks the fortieth anniversary of the World Bank’s first bond issue in Japan. That issue, a JPY 11 billion bond launched in June 1971, represented an important step in the evolution of Japan’s relationship with the World Bank. Japan became a member of the World Bank in 1952, and throughout the 1950’s and 1960’s, as Japan rebuilt from the devastation of World War II, the World Bank provided more than US$850 million of loans to the country. In all, the World Bank made more than 30 loans to Japan during that time, funding important economic development projects throughout the country, including the construction of the first bullet train line.
The World Bank’s final loan to Japan was signed in 1966, and, by 1971, Japan completed the transition from being a borrower from the World Bank to being a source of fnce the World Bank’s inaugural bond issue in the country, Japan has devunding for the World Bank. Sieloped into one of the most important markets in the world for World Bank bonds. Over the last forty years, approximately US$150 billion of World Bank bonds have been sold to Japanese institutional and individual investors.
The changing menu of World Bank debt products for Japanese investors
Japanese Yen-denominated bond issued in the domestic Japanese market by a foreign issuer
- First samurai issue: World Bank, 1971
- First sovereign samurai issue: Australia, 1972
- First corporate samurai issue: Sears, 1979
Foreign currency-denominated bond issued in the domestic Japanese market
- First shogun issue: World Bank, 1985
A Japanese Yen-denominated bond that settles through European clearing systems
- First Daimyo issue: World Bank, 1987
- First Yen-denominated global bond (settles through multiple clearing systems in multiple geographical locations): World Bank, 1992
Typically simple fixed rate bonds that are denominated in a foreign currency for retail investors.
Custom notes that are intended for institutional investors who have the requisite sophistication to understand the market risks in the structure.
World Supporter Fund
An open-ended investment trust fund that began in 2007. Nikko Assett Management manages the fund and sells to Japanese investors. It invests in World Bank bonds denominated in or linked to a wid and well-diversified range of emerging market currencies.