Shiseido Borrows $87 Million for Price of Bottle of PerfumeBy
Cosmetics maker joins Japanese firms selling debt at 0.001%
BOJ buying notes at minus yields gives profits: SMBC Nikko
Shiseido Co., Asia’s biggest cosmetics maker, borrowed 10 billion yen ($87 million) from bond investors on Tuesday for about what it would cost to buy one of the company’s expensive perfumes.
The Tokyo-based firm sold the three-year notes at an annual yield of about 0.00033 percent, or about $287 dollars a year, cheaper than the cost to buy a 30ml bottle of the company’s Suzuro perfume, according to calculations by Bloomberg. Shiseido joins a car tire producer, property developer and toilet maker in a growing list of companies that have been able to raise cash from investors at next to nothing since the Bank of Japan adopted its negative-interest policy in January.
The BOJ is buying corporate bonds at minus interest, meaning that investors who can sell debt with any yield to the central bank are able to make a profit, according to Kentaro Harada, a credit analyst at SMBC Nikko Securities Inc. in Tokyo. Even while the average yield on Japanese company notes has tripled from 0.1 percent at the start of July according to Nomura BPI index data, market borrowing rates for Japanese firms are still at record lows for shorter-term debt.
“The Bank of Japan is still purchasing bonds at minus interest rates and that is the big thing here,” Harada said.
Corporate debt sold this year in Japan at a rate of 0.001 percent or less totals more than 300 billion yen, with the car financing units of the nation’s three big automakers including Toyota Motor Corp., being the biggest sellers by industry, according to calculations by Bloomberg. Shiseido’s bond today was sold with a coupon of 0.001 percent, though investors had to pay a price of 100.002 to buy the debt, according to a statement by deal manager Daiwa Securities Group Inc. The bonds will redeem at face value or 100.
Shiseido is forecasting net income this year of 30 billion yen on sales of 848 billion yen. The company’s Suzuro perfume, which includes jasmine and hyacinth essences, retails on its website at 50,760 yen.
Shiseido’s share price was up 1.8 percent as of 2:15 p.m. in Tokyo.