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Sushi Bonds: Understanding, Issuance, and Examples

Last updated 05/28/2024 by

Silas Bamigbola

Edited by

Fact checked by

Sushi bonds, also known as Eurobonds, are issued by Japanese companies in foreign markets and denominated in currencies other than the yen, with the U.S. dollar being the most common. These fixed-rate bonds appeal to investors during times of yen weakness and offer Japanese institutions a means of diversification. Despite their name, sushi bonds are not directly related to the Japanese dish but rather represent an intriguing facet of international finance.

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Sushi bond explained: A deeper dive

Sushi bonds, while sounding culinary, are actually a significant aspect of international finance. Let’s delve into what sushi bonds are, how they work, their advantages, and why investors and issuers find them attractive.

Understanding sushi bonds

A sushi bond, in essence, is a type of Eurobond issued by Japanese entities but denominated in foreign currencies, typically the U.S. dollar. These bonds come with fixed interest rates and can vary in terms of maturity, offering both short-term and long-term options. While the term may evoke images of Japan’s iconic dish, it actually represents an intriguing intersection of finance and globalization.
Japanese corporations primarily issue sushi bonds to cater to Japanese investors and capitalize on opportunities outside their home market. These bonds gain popularity when the yen is weak, as they provide a hedge against currency risk. Notably, they allow Japanese institutional investors to diversify their portfolios without breaching regulatory limits set by the Bank of Japan.

Benefits of sushi bonds for issuers and investors

Beyond the advantages already mentioned, sushi bonds offer unique benefits to both issuers and investors:

Enhanced market access

Sushi bonds provide Japanese companies with access to a broader investor base in international markets. By tapping into foreign capital markets, issuers can diversify their funding sources and potentially secure lower borrowing costs compared to domestic markets.

Portfolio diversification for investors

For Japanese institutional investors, sushi bonds offer an opportunity to diversify their bond portfolios geographically and by currency. By investing in bonds denominated in foreign currencies, investors can mitigate risks associated with domestic market fluctuations and currency depreciation.
Sushi bonds offer several advantages to both issuers and investors:
Weigh the risks and benefits
Here is a list of the benefits and the drawbacks to consider.
  • Regulatory arbitrage for Japanese investors
  • Access to low-cost financing for issuers
  • Diversification benefits for both parties

Case studies: Real-world examples of sushi bonds

Examining actual instances of sushi bond issuances can provide valuable insights into their practical applications and implications:

Nissan Motor Co. sushi bond issuance

In 2023, Nissan Motor Co. issued a series of sushi bonds denominated in euros, targeting European investors. The bond issuance allowed Nissan to raise capital for its expansion initiatives in the region while taking advantage of favorable interest rates in the euro-denominated bond market.

Mitsubishi Corporation’s dollar-denominated sushi bond

Mitsubishi Corporation, a leading Japanese conglomerate, issued a USD-denominated sushi bond in 2021 to finance its overseas acquisitions and infrastructure projects. The bond issuance attracted global investors seeking exposure to Mitsubishi’s diversified business operations and stable financial performance.

Factors influencing sushi bond issuance

Several factors can influence the issuance and attractiveness of sushi bonds:

Market conditions and currency trends

The prevailing market conditions and currency trends play a crucial role in determining the timing and success of sushi bond issuances. Japanese companies may strategically issue sushi bonds during periods of yen weakness to capitalize on favorable exchange rates and lower borrowing costs.

Investor demand and risk appetite

The level of investor demand and risk appetite for foreign currency-denominated bonds also influences sushi bond issuance. Japanese issuers closely monitor investor sentiment and market dynamics to gauge the potential success of their bond offerings.

Challenges and risks associated with sushi bonds

Despite their benefits, sushi bonds are not without challenges and risks:

Currency exchange rate volatility

Sushi bonds expose both issuers and investors to currency exchange rate fluctuations, which can impact the bond’s value and returns. Sharp movements in exchange rates may lead to unexpected gains or losses for investors and issuers alike.

Regulatory and legal considerations

Sushi bonds may face regulatory and legal challenges, particularly regarding compliance with international financial regulations and tax laws. Issuers and investors must navigate complex regulatory frameworks to ensure compliance and mitigate legal risks.

Comparative analysis: Sushi bonds vs. domestic bonds

Comparingsushi bonds with domestic bonds highlights the differences and similarities between these two types of debt instruments:

Risk profiles and returns

Sushi bonds typically offer higher yields compared to domestic bonds due to currency risk and market factors. However, they also carry higher levels of volatility and uncertainty, making them suitable for investors with a higher risk tolerance.

Market access and investor base

While domestic bonds primarily target local investors, sushi bonds provide issuers with access to a global investor base. This broader market reach can lead to increased liquidity and demand for sushi bonds, especially in international financial centers.

Regulatory considerations for sushi bond issuers

Navigating regulatory requirements is crucial for Japanese companies issuing sushi bonds:

Compliance with international standards

Issuers must ensure compliance with international financial regulations, including disclosure requirements, transparency standards, and tax laws. Failure to meet regulatory standards can lead to legal consequences and reputational damage.


Sushi bonds offer Japanese companies a strategic avenue for raising capital in international markets and provide investors with opportunities for portfolio diversification. Despite the challenges and risks associated with foreign currency-denominated bonds, sushi bonds remain a viable option for issuers and investors seeking to capitalize on global financial opportunities.

Frequently asked questions

What is the difference between sushi bonds and euroyen bonds?

Sushi bonds are issued by Japanese companies in foreign markets and denominated in currencies other than the yen, whereas euroyen bonds are issued by Japanese companies outside Japan but denominated in Japanese yen.

How do sushi bonds benefit Japanese institutional investors?

Sushi bonds offer Japanese institutional investors a means of diversifying their bond portfolios without exceeding regulatory limits set by the Bank of Japan, providing exposure to foreign markets and currencies.

What risks do sushi bonds entail for investors?

Sushi bonds expose investors to currency exchange rate fluctuations, which can impact the bond’s value and returns. Additionally, they may involve higher default risk compared to domestic bonds.

Why do Japanese companies issue sushi bonds?

Japanese companies may issue sushi bonds to capitalize on investment opportunities, access low-cost financing, or refinance foreign currency liabilities. These bonds become more attractive when the yen is weak.

How do sushi bonds contribute to regulatory arbitrage?

Sushi bonds allow Japanese investors to circumvent regulatory limits on foreign securities ownership set by the Bank of Japan, providing a form of regulatory arbitrage.

Are sushi bonds directly related to the Japanese dish?

No, the term “sushi bonds” is a colloquial term used in finance and does not have any direct connection to the Japanese culinary dish.

Can foreign companies issue bonds in Japan?

Yes, foreign companies can issue bonds in Japan denominated in their home currency. These bonds are known as shogun bonds.

Key takeaways

  • Sushi bonds are issued by Japanese companies in foreign markets and denominated in currencies other than the yen.
  • They offer fixed interest rates and appeal to investors during periods of yen weakness.
  • Japanese institutions use sushi bonds to diversify their portfolios and navigate regulatory limits.
  • Despite their name, sushi bonds are not directly related to the Japanese dish but represent an aspect of international finance.

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