Samurai Bond Definition

A samurai bond is a yen-denominated bond issued in Japan by a non-Japanese entity. The term "samurai bond" is derived from the Japanese word for samurai, which is "samurai." Samurai bonds are typically issued by foreign governments, corporations, and financial institutions.

The first samurai bond was issued in 1970 by the World Bank. Since then, the market for samurai bonds has grown significantly. In 2019, the total value of samurai bonds outstanding was approximately $1.3 trillion.

Samurai bonds are typically issued in denominations of 100 million yen or more. The interest rate on a samurai bond is typically determined by a bidding process. The yield on a samurai bond is typically higher than the yield on a comparable bond issued in the United States. This is because samurai bonds are considered to be a riskier investment than U.S. bonds.

There are a number of reasons why non-Japanese entities issue samurai bonds. First, samurai bonds provide a way for non-Japanese entities to access the Japanese yen market. The Japanese yen is a major reserve currency, and it is often used to trade commodities such as oil and gold. Second, samurai bonds can be used to hedge against the risk of currency fluctuations. Third, samurai bonds can be used to raise capital for investment in Japan.

Samurai bonds are a relatively safe investment. The Japanese government has a AAA credit rating, and the Japanese economy is one of the strongest in the world. However, samurai bonds are not without risk. The interest rate on a samurai bond can fluctuate, and the value of the yen can also fluctuate. As a result, investors should carefully consider the risks before investing in samurai bonds.

In conclusion, samurai bonds are a type of yen-denominated bond issued in Japan by a non-Japanese entity. Samurai bonds are typically issued in denominations of 100 million yen or more. The interest rate on a samurai bond is typically determined by a bidding process. The yield on a samurai bond is typically higher than the yield on a comparable bond issued in the United States. Samurai bonds are a relatively safe investment, but they are not without risk.