Kuroda’s Record Bond Buying Spurs Equity-Linked Bond Sales

The Bank of Japan’s monetary easing has triggered a surge in equity-linked bond sales as the stock market reached a seven-year high.

Sales of so-called uridashi notes tied to shares rose 55 percent to $1.49 billion last month, the most since January, after BOJ governor Haruhiko Kuroda’s surprise expansion of record bond buying, according to data compiled by Bloomberg. Of those backed by just one equity or stock index, more than half were linked to the Nikkei 225 Stock Average, the data show.

“The Nikkei surged to more than 17,000 after so-called Kuroda’s bazooka and thereafter, large amounts of Nikkei-linked bonds were redeemed,” saidHiroaki Konishi, a Tokyo-based spokesman at Mitsubishi UFJ Morgan Stanley Securities Co., which managed more than half of equity-linked uridashi note sales last month. “Once notes are redeemed, investors tend to reinvest in the same product,” he said.

Bloomberg

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