Tokyo, Japan – Suntory, the Japanese beverage giant known for its premium whiskies and ownership of Jim Beam, has issued a $500-million five-year note. According to a source familiar with the matter, the proceeds from this note will be used for general corporate purposes, including debt repayment. This move comes as Suntory faces a maturing $500-million note in October.
Yen Depreciation and Debt Issuance Trends
Japanese companies like Suntory have a history of issuing debt in foreign currencies when making overseas investments or acquiring foreign firms. In recent years, prominent examples include Seven & i Holdings Co. and Takeda Pharmaceutical Co. However, the current financial landscape has shifted significantly due to the yen’s steep decline against the dollar, reaching its weakest level since 1990. This depreciation has led to increased borrowing costs in yen terms, subsequently reducing Japanese firms’ issuance of dollar-denominated bonds.
Impact on Dollar-Bond Issuance
As of Tuesday, data compiled by Bloomberg shows a sharp decline in dollar-bond issuance by Japanese companies, with a nearly one-third drop this year to $22.2 billion. This represents the slowest start to the year in four years. In contrast, primary markets in the US and Europe have seen a surge in bond sales as investors chase higher yields before anticipated interest rate cuts by central banks.
Strategic Expansion and Market Position
Suntory is actively seeking opportunities for global expansion as Japan’s population continues to decline. Recently, The Wall Street Journal reported that Suntory was in talks to acquire Boston Beer Co., the US-based brewer known for its Samuel Adams brand. However, Suntory has denied these acquisition rumors.
Increasing Production to Meet Global Demand
In response to the growing global demand for its premium Japanese whiskey, Suntory’s whiskey supplier announced plans in November to boost production capacity by 2027. This strategic move aims to enhance the company’s ability to meet increasing international demand for its products.
Conclusion
Suntory’s financial strategies reflect the broader challenges faced by Japanese companies in the current economic environment. By issuing the five-year note, Suntory is taking decisive steps to manage its debt and support its ambitious global expansion plans.
Related: Suntory Holdings CEO’s view on Chinese Economy
