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Developments in Corporate Bond Spreads at Issuance


November 14, 2023
OCHI Kaori, OSADA Mitsuhiro
Monetary Affairs Department

Firms' financing environment in terms of commercial paper, corporate bond, and bank lending is one of the spillover channels of monetary policy. In particular, this article overviews the recent developments in corporate bond spreads in the primary markets, focusing mainly on the period from mid-2022 to early 2023 when we witnessed the spread widening. A quantitative time-series analysis using issue-by-issue data suggests that the widening of corporate bond spreads was caused by (1) increased demand for working capital in response to rising commodity prices and (2) spillover effects of tightening foreign financial conditions, reflecting monetary policy tightening by foreign central banks, and was likely affected by (3) a decline in the degree of functionality of the Japanese government bond (JGB) market.


The Bank of Japan Review is published by the Bank of Japan to explain recent economic and financial topics for a wide range of readers. This report, 2023-E-8, is a translation of the original Japanese version, 2023-J-11, published in September 2023. Views expressed are those of the authors and do not necessarily reflect those of the Bank of Japan. If you have comments or questions, please contact Monetary Affairs Department (E-mail: