(Bloomberg) -- Japan’s primary market for corporate bonds had its busiest session since 2019 after yield premiums tightened. 

Leading the flurry of deals targeting institutional investors were Mitsubishi UFJ Financial Group Inc., which priced ¥200 billion ($1.33 billion) of notes, and Sony Group Corp., which sold ¥150 billion of bonds. SoftBank Group Corp. offered ¥550 billion of notes to retail investors, pushing up total bond sales to about ¥1.09 trillion on Friday, the most in one day since September 2019, according to data compiled by Bloomberg.

Traders widely expect the Bank of Japan to hike interest rates for the first time since 2007 this month or in April, but domestic government bond yields have remained calm. That’s reassured investors that borrowing costs won’t shoot up, and BOJ officials have repeatedly said that policy will be kept accommodative after they remove the world’s last subzero rates. 

“Even if there is a policy change, investors are less concerned that they will suffer from unrealized losses by investing in bonds now as long-term interest rates have been relatively stable,” said Kazuma Ogino, senior credit analyst at Nomura Securities Co. “Issuance in January and February was weak, so investor demand for corporate bonds strengthened, resulting in tighter spreads.”

Spreads on Japanese corporate bonds have tightened about 4 basis points this year to around 53.5 basis points, the lowest since September 2022. Ten-year sovereign debt yields have climbed to 0.71% from around 0.61% at the start of the year, but those are still well below the 1% level that the BOJ set as a reference point. That suggests traders aren’t rushing to exit bonds in spite of a looming policy change. 

Volatile overnight indexed swaps pointed to rising odds of a March BOJ rate hike, increasing to 33% compared with around 26% late Thursday.

Other deals on Friday included a ¥80 billion note sale from SBI Holdings Inc. and a ¥112.3 billion yen bond offering from MetLife Inc.

--With assistance from Rie Morita.

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