Japan Credit Investors Seek Shield From M&A Risks as Deals Boom
Seven & i Holdings Co. has seen its yield premiums jump as it grapples with growing pressure to improve corporate value amid a takeover bid.
Photographer: Kiyoshi Ota/BloombergInvestors in Japanese corporate bonds are increasingly seeking protection against possible credit deterioration when an issuer becomes a takeover target.
Change of Control covenants — which give bondholders certain rights to redeem the debt before maturity if the borrower has a significant change in ownership structure — have until now been very rarely seen in the ¥100 trillion ($680 billion) Japanese credit market. Yet many investors argue that needs to change, with the risks highlighted by future ownership uncertainty of frequent issuers such as convenience store giant Seven & i Holdings Co. and Nissan Motor Co.