A sushi bond is a bond issued outside of Japan by a Japanese company and denominated in a foreign currency. Sushi bonds are typically bought by institutional investors in Japan, although they are available to other buyers as well. Because the sushi bond is issued beyond Japanese jurisdiction, it is not applied to regulatory limits on foreign investment. A number of other colorful terms are used to describe other types of Japanese and Asian bond products, including dragon bonds, samurai bonds, and shogun bonds.
In the case of a sushi bond, the issuing institution often issues the bond in United States dollars, although not necessarily. The size of the bond issue can vary and people can buy bonds directly or on the secondary market. There are a variety of reasons to issue bonds overseas, ranging from the desire to access new investment opportunities to wanting to provide a mechanism for offshore investment for institutions interested in investing outside their home nation. Like other bonds, sushi bonds receive ratings on the basis of their reliability as a purchase.
Firms issuing sushi bonds release information about upcoming bond issues for the benefit of potential investors, allowing them to prepare when they learn about the size of the bond issue and the interest being offered. The ability to invest overseas with a sushi bond can be important for companies interested in taking advantage of shifting financial markets, and bonds can be long or short term investments, depending on how the offering is structured.
As with other financial products, buyers must keep careful records about the bonds they buy for regulatory purposes. The issuer also maintains records, registering bonds and their buyers. These records are used when payments need to be distributed and when regulators audit accounting practices to confirm that a company is doing business in accordance with financial regulations. In the case of publicly traded companies, general information about bond issues and their size is available, although detailed information about individual investors is not.
A concept related to the sushi bond is the shogun or geisha bond, issued in foreign currency by a foreign company operating in Japan. A German financial company could issue a bond in Tokyo denominated in euros, for example. The samurai bond is a bond issued in Japan by a foreign company, denominated in yen, allowing foreign companies to trade in yen. Dragon bonds are any bonds issued in Asia, not just Japan, and denominated in US dollars.