Japan Credit Market: July BOJ policy meeting: Key credit market implications and impact on the outlook

Research evidence excerpt

Japan Credit Market

Global Markets Research

18 August 2026

Nomura Securities Co., Ltd., Tokyo

Credit - Japan

July BOJ policy meeting: Key credit market

implications and impact on the outlook

Despite concerns over BOJ hawkishness, spread widening from supplydemand factors has been limited by bond supply that is in line with demand.

In this report, we summarize our views on key themes related to the outlook for Japan’s

credit market (JCM). This installment is a brief commentary on the impact of the 30–31

July BOJ policy meeting on Japan’s credit market.

Research Analysts

Credit Strategy

Kazuma Ogino - NSC

• Facts and market reaction: The BOJ left its policy rate unchanged by an 8-1 vote; the

sole dissenting vote was from Board Member Hajime Takata, who proposed a

consecutive rate hike. The BOJ’s assessment of accommodative financial conditions

was unchanged. JGB yields fell slightly in response.

• Credit market focus factor #1, BOJ policy outlook: We revised our main scenario for the

pace of rate hikes to slightly faster than two per year through mid-2027 (terminal rate:

1.75%), but the market’s expectation for the terminal rate is even higher.

• Credit market focus factor #3, corporate bond market supply and demand: While the

pace of corporate bond issuance is likely to remain high, headwinds include investors'

cautious stance on the long end of the curve and their need to sell low-coupon bonds.

However, a sense that rates have already risen quite a bit and careful efforts to

manage debt issuance have stimulated corporate bond demand, with the result that

the supply-demand balance has improved by more than expected.

• Assessment of positives versus negatives and the impact on our spread forecasts: For

FY3/27, negatives include further room for rate increases as BOJ rate hikes gain more

momentum, selling of existing bonds, and a large supply of new issues. However, a

sense that rates have already risen quite a bit and careful efforts to manage debt

issuance have stimulated corporate bond demand. We think spreads have some room

to widen in H1 but are likely to start tightening modestly in H2.

Fig. 1: Japanese corporate bond T-spreads,

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