This was in the news a while ago.
TOKYO -- Japanese machinery maker Kubota has issued $500 million in dollar-denominated bonds, its first since 1992, to meet its increasing capital needs in the U.S. as sales of its farm and construction equipment grow.
The three-year debt issued by Kubota Credit U.S.A. in late May, guaranteed by its Japanese parent, carries a 4.958% coupon and an A rating from S&P Global. Morgan Stanley was among the lead underwriters.
When Kubota sells equipment, Kubota Credit, its finance arm, extends financing to the buyer through the dealership. The dollar bonds provide another source of capital for these loans beyond securitization and borrowing from Japanese banks, diversifying its funding options in case of risks such as the yen weakening further against the dollar.
Last June, Kubota issued its first yen bonds in nine years with a 150 billion yen ($1.1 billion) offering, followed by a 120 billion yen float in April, partly as a way to brace for higher global interest rates by shifting to debt with longer maturities.
"Given the possibility of interest rates rising, we have to use longer-term [debt] to avoid that risk," said Masato Yoshikawa, an executive vice president at Kubota. The company will consider more dollar bond offerings in the future.
Higher financing costs linked to sales growth in the U.S. contributed to Kubota's group operating cash flow falling into the red for the first time in about 13 years in 2022. The company reported negative net free cash flow of 326.1 billion yen, owing partly to capital expenditures including acquisitions and a new research and development center.
"We want to get it out of negative territory soon" by improving the company's fund balance and recouping costs, Yoshikawa said.
