Japanese mobile phone giant NTT DoCoMo has launched its first domestic corporate bond, with a Ñ180 billion ($1.5 billion) offering. Nomura Securities acted as lead manager and Morgan Stanley Dean Witter as co-lead.
The borrower had originally intended to raise Ñ200 billion through its debt issue, part of an overall funding programme to raise Ñ1800 billion for overseas expansion, but investor interest in the longer term notes was less than anticipated and the deal was reduced in size.
DoCoMo wanted to issue Ñ100 billion in equal five- and ten-year tranches, but it was decided to reduce the ten-year tranche to Ñ50 billion and increase the shorter-dated tranche to Ñ130 billion.
Bankers say the reduction in deal size reflected investors' current preference for shorter dated securities, particularly since many accounts had already bought into a Ñ100 billion deal last month by DoCoMo's parent company, Nippon Telegraph Telephone Corp (NTT). Bond investors also gained exposure to the telecom sector in late February through a Ñ160 billion offering by Deutsche Telekom.
That said, bankers add that must have been slightly disappointing for DoCoMo not to achieve its targeted amount, particularly since its Moody's rating of Aa1 is higher than Japan's Aa2 sovereign rating.
Nonetheless, in terms of pricing the deal came in a lot tighter than similar dated transactions. The five-year notes, whose issue price was 99.95, carry a coupon of 0.75%, representing a spread of 19 basis points over government bonds.
The ten-year bonds carry a 1.49% annual coupon, a yield of 30 basis points over government bonds on an issue price of 99.93. The Nippon Telegraph Telephone Corp ten year paper had a coupon of 1.7%.
An official at Nomura hailed the deal as a success for a first time issuer and said it was picked up by pension funds and public and regional banks.
