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Samurai Bonds

Moneyzine Editor
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Moneyzine Editor
1 mins
September 21st, 2023
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Definition

The term samurai bond refers to an indenture issued in Japan, in Japanese yen, by a foreign bank or corporation. Samurai bonds are issued when a corporation wishes to raise capital from investors located in Japan.

Explanation

Foreign corporations that wish to raise funds in Japan have the option of issuing what are known as samurai bonds. These bonds are sold by non-domestic entities, including corporations, financial institutions and governments, and are issued in Japanese yen. Samurai bonds are subject to local regulations. This is typically done when the interest rates in Japan are low relative to the foreign corporation's domestic rates, which lowers their interest expense.

Since the bond is issued in Japan's domestic currency, investors located in Japan are also insulated from currency exchange rate risk. Foreign companies will usually issue these securities if they have plans to establish operations in Japan. These bonds are also attractive to investors wishing to geographically diversify their portfolios.

At one time, Samurai were the military nobility and officers of Japan, and were trained to exhibit self-discipline.

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