Samurai bond sales expected to rise in 2013 on weak yen

South Korean firms' sales of yen-denominated bonds are expected to increase this year as local companies seek to diversify funding sources amid Japan's quantitative easing, analysts said Tuesday.

The combined value of Samurai bonds issued by local firms reached 317.7 billion yen ($3.38 billion) in 2012, rising sharply from 171.2 billion yen tallied two years earlier, industry data showed. Samurai bonds refer to yen-denominated debts issued by non-Japanese firms in the Japanese market.

Market watchers said the appetite for Samurai bonds by local firms is expected to increase down the road, as Japanese Prime Minister Shinzo Abe made efforts to bolster quantitative easing, giving an extra push to the weak yen.

"The weaker Japanese currency translates into lower debt burdens for South Korean firms that issued Samurai bonds," said Park Sung-wook, a researcher at the Korea Institute of Finance.

"More companies will issue Samurai bonds when the yen continues to remain weak."

Lim Ki-hyun, a researcher at the Korea Center for International Finance, echoed the view, adding Japan has pumped massive liquidity into the financial market by maintaining a low key interest rate, which gave local firms more leeway to issue Samurai bonds.

Market watchers said South Korea's improved sovereign rating and better-than-expected performances by local firms last year also add to the brighter outlook on the country's issuance of Samurai bonds.

In 2012, three major global credit appraisers -- Moody's, Fitch and Standard & Poor's -- raised their credit ratings on South Korea to levels seen before the 1997-1998 financial crisis, citing the country's fiscal soundness and lowered geopolitical risks. (Yonhap News)