One key measure that investors will be watching is the cost of hedging against losses on the yen. Amid a surging dollar, those hedging costs jumped in the past year. That, along with plunging bond prices in the US and Europe, prompted Japanese investors to pull back from buying debt in overseas markets.

This was a big deal for some of the world’s largest fixed income markets, including US corporate bonds, because Japanese investors were a significant part of the buyer base. Many investors are now looking for an opportunity to chase yields overseas again once hedging costs ease.

China Developers

China stepped up support for its debt-laden property sector, with its central bank saying it will guide financial institutions to support mergers and acquisitions in the industry and help defuse risks and improve financial conditions of top-tier developers. China’s securities regulator also said it will allow qualified developers to secure a backdoor listing via listed peers. Beijing’s policy bazooka has fueled an advance in the bonds and shares of developers, although there are signs the rally is faltering.

Meanwhile, a key domestic unit of Country Garden Holdings Co., China’s top developer by sales, plans to sell as much as 1 billion yuan ($US143 million) of three-year onshore bonds and was expected to start building orders on Thursday. It’s the latest bond issuance under a state-guarantee program that first emerged in August.

Elsewhere

Kazakh financial firms have been scooping up Russian government debt at a steep discount from investors unable to exit the market because of sanctions and other restrictions imposed after the invasion of Ukraine, people familiar with the matter told Bloomberg News Goldman Sachs is in discussions with investors about selling around $US4 billion of subordinated debt that lenders backing the buyout of Citrix Systems have held for months, according to people with knowledge of the matter. The timing of the transaction is dependent on the release of new audited financials, which aren’t expected until the new year, said the people.

So-called negative carry in closed-end municipal bond funds, driven by the sharp increase in short-term bond yields, is putting funds at risk of more dividend cuts Private equity firms are getting a preview of what 2023 has in store for them.

First, CD&R had to scale back its deal for the purchase of Atalian, a French services business. Then, BC Partners announced it was handing over the keys of Spanish bridewear maker Pronovias to lenders led by Bain A group of lenders to Vista Equity Partners’ Finastra Group Holdings Ltd. have retained financial and legal advisers as the financial software company faces more than $4 billion of debt maturities in 2024. The lenders are working with PJT Partners and Gibson Dunn & Crutcher

With assistance from Wei Zhou, Rachel Butt, Justina Lee, Steven Church, Jeremy Hill, Ayai Tomisawa, Luca Casiraghi, Hannah Benjamin-Cook, Dana El Baltaji and Andrew Monahan.