How to Invest
Choosing the Securities you Want to Buy
Corporate Securities At-A-Glance
1. Government Agency Bonds
| Issuer | • Kodan (e.g., housing, highways) and Kok+D510o (e.g., financial arm of local public corporations) • Special corporations (e.g., Electric Power Development Co., Ltd.) |
| Tenor | 1 to 35 years, but normally 10 years |
| Currency | Japanese yen |
| Interest Payment | Interest is generally fixed and paid semiannually |
| Average Issue Size | JPY 30 billion |
| Minimum Amount of Bid | JPY 10,000 |
| Method of Sale in the Primary Market | Public offering or private placement |
| Who May Apply | Any registered investor through designated financial institutions |
| Redemption | Generally redeemed upon maturity, but different corporate bonds may have various redemption features |
| Taxation | Withholding tax on coupon is 20%, which consists of 15% income tax (national tax) and 5% local tax. Eighteen percent (18%) tax rate is applied to the redemption profit for discount-issued bonds. |
| Secondary Market Trading | Mostly over-the-counter market and on securities exchanges through brokerage firms |
2. Bank Debentures
| Instruments | • Zenshinren bonds • Kinko bonds • Bank debentures |
| Issuer | • Shinkin Central Bank • Norinchukin Bank (Central Cooperative Bank for Agriculture and Forestry) • Shoko Chukin Bank (Central Bank for Commercial and Industrial Cooperatives) • Mizuho Corporate Bank • Shinsei Bank • Aozora Bank • Tokyo-Mitsubishi Bank for more information on Bank Debenture issuers. |
| Tenors | 1 to 10 years |
| Currency | Japanese yen |
| Interest Payment | Discounted but mostly interest-bearing |
| Average Issue Size | JPY 15 billion |
| Minimum Amount of Bid | JPY 10,000 for individual investors JPY 10 million for institutional investors |
| Method of Sale in the Primary Market | Discount bank debentures – issued twice monthly by banking institutions, which commission securities companies to sell them on their behalf. These debentures are issued on an issue-as-you-sell method. This means the issuer does not decide the issue amount. Whatever the issuer sells becomes the issue amount. Interest-bearing bank debentures – issued either by public offering on a specified day or through a selling method over a defined period twice each month. |
| Who May Apply | Any registered investor through designated financial institutions |
| Redemption | Generally redeemed upon maturity but different corporate bonds may have various redemption features |
| Taxation | Withholding tax on coupon is 20%, which consists of 15% income tax (national tax) and 5% local tax. Eighteen percent (18%) tax rate is applied to the redemption profit for discount-issued bonds. |
| Secondary Market Trading | Mostly over-the-counter market and on securities exchanges through brokerage firms |
3. Private Corporate Bonds
| Issuer | • Japan Railways Co., Ltd. (JR) • Nippon Telegraph and Telephone Corporation (NTT) • Nippon Hoso Kyokai (NHK) (Japan Broadcasting Corporation) • Teito Rapid Transit Authority • Electric power companies • Other private corporations |
| Tenor | 1 to 30 years |
| Currency | Japanese yen |
| Interest Payment | Interest is generally fixed and paid semiannually |
| Average Issue Size | JPY 25 billion (straight bonds) |
| Minimum Amount of Bid | JPY 100,000 for individual investors JPY 100 million for institutional investors |
| Method of Sale in the Primary Market | Public offering or private placement |
| Who May Apply | Any registered investor through designated financial institutions |
| Redemption | Generally redeemed upon maturity but different corporate bonds may have various redemption features. Some bonds can be callable before maturity or converted to equity. |
| Taxation | Withholding tax on coupon is 20%, which consists of 15% income tax (national tax) and 5% local tax. Eighteen percent (18%) tax rate is applied to the redemption profit for discount-issued bonds. |
| Secondary Market Trading | Mostly over-the-counter market and on securities exchanges through brokerage firms |
4. Samurai Bonds
| Issuer | International organizations, foreign corporations, and foreign governments |
| Tenor | 5 to 20 years |
| Currency | Japanese yen |
| Interest Payment | Interest is generally fixed and paid semiannually |
| Average Issue Size | JPY 30 billion |
| Minimum Amount of Bid | JPY 100,000 for individual investors
|
| Method of Sale in the Primary Market | Public offering or private placement |
| Who May Apply | Any registered investor through designated financial institutions |
| Redemption | Generally redeemed upon maturity but different corporate bonds may have various redemption features |
| Taxation | Withholding tax on coupon is 20%, which consists of 15% income tax (national tax) and 5% local tax. Eighteen percent (18%) tax rate is applied to the redemption profit for discount-issued bonds. |
| Secondary Market Trading | Mostly over-the-counter market and on securities exchanges through brokerage firms |
List of Corporate Bond Issuers
List of Corporate Bond Issuers
A. Government Agency Bond Issuers
Government agency bonds may be classified as government-guaranteed bonds, the Treasury investment and loan agencies issued bonds, or privately-placed government agency bonds.
B. Bank Debenture Issuers
Bank debentures are either Zenshinren bonds, Kinko bonds, or Bank Debentures. Zenshinren bonds are issued by the Shinkin Central Bank (formerly the Zenshinren Bank), which acts as the Central Bank for Shinkin Banks in a similar role to that of the Bank of Japan for ordinary banks. Shinkin Banks are Credit Associations, Community Banks, Municipal Banks, and Town Banks. Every Shinkin Bank is a member of the Shinkin Central Bank. Kinko bonds are usually referred to as bonds issued by credit banks.
C. Private Corporate Bond Issuers
Corporate bonds are either straight bonds or bonds carrying an equity warrant.
D. Foreign Bond Issuers
Japan’s foreign bonds are classified into Samurai bonds (JPY-denominated bonds) and Shogun bonds (foreign currency-denominated bonds). Here we cover only the Samurai bonds.