Intricacies of the Samurai Market

The term Samurai Market was once considered a slang term, but it is now the widely accepted name for the foreign bond market in Japan. In fact, many markets have international nicknames, such as the American markets are known as the "Yankee Market." The Samurai Market is one of the most mystified in the business world because there are only a few US companies listed on the exchange. As a result, it remains unfamiliar to most US investors.

Foreign Bond Markets

The Samurai market welcomes foreign bond issuers. It serves as a place for foreign companies to enter into the Japanese economy, listing their bonds for sale in Japanese Yen. This means companies from all over the world can borrow money from not only Japanese investors but a variety of international investors. Japan has served for sometime as a meeting ground for multiple international business interests. In general, the environment is conducive to individuals from both the east and the west. Located in an Asian country with a highly modern culture, The Samurai Market is a prime place for investors and companies from many different backgrounds to trade.

Issuing Bonds in Japan

When a corporation wants to issue bonds on the Samurai Market, the corporation has to be approved by Japan's finance ministry. This ministry works similarly to the Securities Exchange Commission. Companies must register with the SEC in order to be part of a domestic stock exchange such as the New York Stock Exchange. The finance ministry approves a company to sell up to a certain yen amount of bonds, creating a new source of borrowing for the corporation. Historically, companies listed on the Samurai Market have been from all over the world. However, this was narrowed in the late 1990s when Japan experienced its own recession. The market has seen a revival following the international recession of the late 2000s as more investors looked to move their dollars to other currencies and markets. 

US Companies in the Samurai Market

The international retailer Wal-Mart turned heads when it was approved to issue about 300 billion yen worth of debt on the Samurai Market in 2008, becoming the first US retailer to enter the market since Sears Roebuck in 1979. With the revival of the Japanese economy appearing strong, many more US retailers and companies may try to enter the Samurai Market to gain access to foreign investors not only in Japan but worldwide. The market truly serves as an international hotbed of bond purchasing, opening doors to financing that would not be open to organizations issuing bonds only within the US markets. However, issuing bonds on the Samurai market is not without its risks. It is not always possible to know who is purchasing your bonds, and some companies may find they are heavily financed by a controversial entity. For example, many wealthy oil families from the Middle East who would like to invest in US companies can do so through a foreign bond market. While many companies are comfortable without knowing where their financing is coming from, others would prefer to work with known financiers.

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