Japan’s Biggest Karaoke Manufacturer Sells First Bond Since 1996

Japan’s Biggest Karaoke Manufacturer Sells First Bond Since 1996
Daiichikosho Co.'s LIVE DAM karaoke equipment. Source: Daiichikosho Co. via Bloomberg

Daiichikosho Co., Japan’s biggest karaoke equipment and software provider, sold its first bond in 16 years to diversify its funding sources.

Daiichikosho raised 10 billion yen ($127 million) by offering 3.5 billion yen of 0.486 percent five-year notes priced to yield 30 basis points more than sovereign debt, and 6.5 billion yen of seven-year securities with a 0.806 percent coupon at a spread of 44 basis points, according to data compiled by Bloomberg.

Japan’s corporate borrowing costs are falling as five-year government bond yields dropped as low as 0.175 percent this month, the least since June 2003. The extra yield investors demand to own company bonds rather than government debt fell to 55 basis points on July 5, the lowest since May 2011, according to an index compiled by Nomura Securities Co.

“Market conditions right now are good,” Hideo Sekimori, an assistant general manager at Daiichikosho’s general planning department, said in a telephone interview from Tokyo today. The purpose of the sale is to diversify funding sources and the company has no detailed plan for using the proceeds at the moment, he said.

Daiichikosho last sold bonds in April 1996 when it raised 35 billion yen from convertible notes which matured in March 2005, according to data compiled by Bloomberg. The company is rated a A with a stable outlook by Japan Credit Rating Agency, its sixth-highest investment-grade.

The karaoke manufacturer initially planned to sell about 8 billion yen in total, a person with direct knowledge of the matter said July 17, asking not to be identified because the details are private.

Karaoke is a form of entertainment in which a machine plays only the music of popular songs so that people can sing the words themselves. The market size in Japan was 617 billion yen in 2011, according to All-Japan Karaoke Industrialist Association’s website.

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