Wal-Mart Sells 1st Retailer Samurai Debt in 29 Years

Wal-Mart Stores Inc. plans to sell 60 billion yen ($561 million) of samurai bonds in Japan, the first such issue by a retailer in 29 years, taking advantage of lower borrowing costs, reported The Bloomberg.

The world's largest retailer is offering fixed-rate bonds in three- and five-year maturities, as well as a five-year note paying a variable interest rate tied to the six-month yen London interbank offered rate, according to a filing with Japan's Ministry of Finance.

``The U.S. market is highly volatile and the spread is widening, even for the highly-rated corporates,'' said Koyo Ozeki, head of Asia-Pacific credit research at Pimco Japan Ltd. in Tokyo. ``The Japanese market is more issuer friendly, offering an absolute low level of interest rates and fairly stable credit spreads.''

Companies from General Electric Capital Corp. to the Royal Bank of Canada are raising money in Japan as credit conditions tighten in the U.S. and Europe, pushing up borrowing costs. Sales of samurai notes have risen 45 percent to 1.86 trillion yen so far this year and posted the biggest increase in first-half issuance since at least 1999, according to data compiled by Bloomberg.

Wal-Mart, based in Bentonville, Arkansas, split the sale into three bonds of 20 billion yen each, the ministry filing said. Mitsubishi UFJ Securities Co., Mizuho Securities Co. and Nikko Citigroup Ltd. are managing the sale, the document said.

Corporate borrowers ``may benefit from slightly tighter spreads in Japan compared to their home market,'' said Ozeki of Pimco, whose U.S. parent manages the world's biggest bond fund. ``In Japan, investors will actually provide a substantial amount of money once the pricing is agreed.''

Wal-Mart has increased its investment in Japan, agreeing in October to pay as much as 100 billion yen for the 49.1 percent of Japanese food and household goods chain Seiyu Ltd. it didn't already own. At the time, Wal-Mart said full ownership of Seiyu would help it accelerate shop renovations and cost-cutting efforts at the Tokyo-based store operator.

Wal-Mart first took a minority stake in Seiyu in 2002 and became a majority owner in late 2005.

Samurai bonds are yen-denominated bonds sold by foreign entities in Japan's domestic market.