Toyota’s Lost AAA Gives Japan Bonds Rare Value: Mortgages

Credit ratings on Japanese mortgage bonds have surpassed Toyota Motor Corp., the country’s highest-ranked company by Standard & Poor’s, boosting their appeal for investors and driving spreads to the narrowest on record.

The Japan Housing Finance Agency sold 148.8 billion yen ($1.8 billion) of 1.44 percent bonds tied to home loans on March 27 that yielded 40 basis points more than government bonds, according to data compiled by Bloomberg. The spread was the narrowest for a new offering since April 2007, and compares with a coupon of 1.92 percent and yield gap of 68 basis points on residential mortgage-backed securities issued in March, 2011.