Shogun Bond

Shogun bonds have everything and nothing to do with Japan. Let us explain.

Shogun bonds are bonds that: 1) have been issued in Japan, 2) have been issued by a foreign (non-Japanese) institution...and 3) are denominated in any currency other than the Japanese yen.

An American company issuing Malaysian ringgit denominated bonds in Japan? It’s a Shogun. A Chinese bank issuing Indian rupee-denominated bonds in Japan? Shogun again. The first Shogun bond issued in Japan was in the '80s by the World Bank, in none other than U.S. dollar denomination. To be clear, anyone (Japanese or otherwise) can buy Shogun bonds.

If you’ve heard of a Samurai bond, Shogun bonds are like those, except Samurai bonds are always in yen. Shogun bonds are the anti-Samurai bonds, in anything except yen. Both terms come from Japanese fighting skills and military lingo. Shogun bonds were initially created to ramp up Japan’s international investment market. Today, they’re not as popular. Japan’s got bigger fish to fry these days, like Samurai bonds, denominated in their own currency.