Japanese consumer lender Aiful Corp. sold bonds with the world’s lowest coupon for a junk-rated issuer this year, as record low rates amid the pandemic redefine what high yield means.
Aiful priced ¥15 billion of 1.5-year notes with a coupon of 1%, according to Nomura Securities Co., one of the underwriters. It’s the second-ever junk bond offered publicly in the domestic credit market, after Aiful priced the first such security last year at a lower coupon at 0.99%.
Unprecedented stimulus from central banks amid the pandemic has dragged down rates, and left investors clamoring for debt that may help increase returns. The average yield on high-yield bonds globally has fallen 85 basis points this year to an all-time low of 4.83%, according to a Bloomberg Barclays index. A comeback in even the riskiest junk securities is gaining ground, narrowing the gap between lower-rated and higher-quality debt.