Mizuho Seeks Bigger Presence in Yankee Bonds to Boost Fee Income

  • Using global network to support companies entering the U.S.
  • Ranked 10th in U.S. investment-grade corporate bonds in 2016

Mizuho Financial Group Inc. is seeking to boost its presence in Yankee bonds -- dollar-denominated bonds issued in the U.S. by foreign entities -- in a bid to tap into its global network and boost fee income from some of Asia and Europe’s largest companies.

“We’re aiming to grow our business by supporting the funding needs and business strategies of Asian and European companies as they expand in the U.S.,” Manabu Taketani, a senior manager in the lender’s global corporate coordination department, said in an interview last week. He added that Mizuho’s banking and securities units are working together on this initiative.

Japan’s second-largest bank by assets acquired a portfolio of North American loans from Royal Bank of Scotland Group Plc in 2015 and took on about 130 RBS bankers. This is helping it to both gain access to corporate clients and boost its underwriting capacity.

Mizuho ranked 10th in U.S. investment-grade corporate bonds in 2016, managing $41.4 billion in deals, data compiled by Bloomberg show. This is up from before the acquisition when it was in 16th spot with $16.3 billion in 2014.

Mizuho’s business in the U.S. "is one example of a Japanese bank that is succeeding overseas,” said Toyoki Sameshima, a senior analyst at BNP Paribas SA in Tokyo. Moving into Yankee bonds is a logical direction to take, he said, adding that finding and retaining staff and controlling expenses associated with growth would be the key challenges.

Taketani said Mizuho also plans to use the global network to capture business with U.S. companies when they issue bonds in Japan or elsewhere.

Mizuho’s strategy for overseas business focuses on about 300 selected non-Japanese blue-chip corporations, using bank lending relationships to access ancillary businesses such as bond underwriting to earn fees on the securities side.

The bank was joint lead arranger for Belgium-based drink maker Anheuser-Busch InBev SA when it issued $46 billion in senior notes in 2016.

Mizuho managed 379 deals in the fiscal year ended March 2016, up from 326 in the previous 12 months. The lender reached 334 in the first nine months of the financial year that finished last month, and Taketani said the full-year total will be a record.

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