Finance Desk

Accelerating yield hikes fuel capital repatriation, threatening to drive up USD debt issuance costs.

Japan’s rapidly rising interest rates are providing another significant variable for corporate treasurers with upcoming bond offerings or refinancings to monitor.

While the deluge of debt issued by so-called hyperscalers has yet to increase other companies’ borrowing costs, it’s critical for treasurers to track it alongside another recent development: rapidly rising Japanese interest rates.

The Japanese government and private investors hold $1.2 trillion of U.S. federal debt, more than any other country, according to the Congressional Research Service, and they are major investors in U.S. corporate bonds. Three years ago, the 10-year Japanese government bond rate was close to zero, as it had been for decades, prompting Japanese investors to seek yield abroad. The rate began increasing in 2022 and has nearly doubled over the past year, approaching 2.9% by mid-August.

Lotfi Karoui, a multi-asset credit strategist at PIMCO, noted in an Aug. 3 report the accelerating reduction in U.S. Treasury purchases by non-U.S. public and private sector entities. The best evidence of that trend is Japan, he wrote, where Bank of Japan (BoJ) data show government and private Japanese investors becoming net sellers of long-term U.S. debt securities in the 12 months leading up to May 31, following three years as net buyers.  

There is little evidence so far of a “sell America trade,” Karoui said, and demand for U.S. corporate credit remains strong. But issuers may have to pay more for it.

The U.S. federal government must fund a record deficit, and investment-grade corporate issuance in August, typically a slow month, is setting records.

“If Japanese investors are also selling U.S. securities into the market, that’s a lot of selling pressure that could push up U.S. rates,” said Amol Dhargalkar, senior managing director at Chatham Financial, which advises corporates on debt and hedging strategies. U.S. issuers, he added, could see wider spreads on top of a higher benchmark rate.

One indication of further retrenchment by Japanese investors, Dhargalkar said, would be more non-Japanese issuers pursuing yen offerings to take advantage of growing demand for yen-denominated securities. Alphabet and Berkshire Hathaway recently completed large yen offerings, and he anticipates more, especially from companies with Japanese operations that can avoid costly currency hedges.

Another wrinkle is the intervention starting in late July by the Japanese and U.S. governments to counter the yen’s dramatic weakening against the U.S. dollar by selling dollars and buying yen. Further yen appreciation will likely require more rate hikes by the BoJ, according to Aug. 5 commentary by Fitch Ratings, prompting even more yen repatriation.

“This is one of many new avenues that CFOs and their finance teams have to make sure they’re looking at as they consider capital markets transactions,” Dhargalkar said.

John Hintze is a contributing writer based in the U.S.

Banks clear major milestone toward real-time, cross-border tokenized deposits.

Tokenized deposits are a step closer to broader institutional use as HSBC Holdings PLC and Standard Chartered PLC completed the first bank-to-bank transaction via the banking messaging consortium SWIFT’s digital blockchain-backed ledger, the banks reported on Aug. 19.

“As institutional demand grows for faster, more efficient ways to move liquidity, and optimize working capital increase, interoperable tokenized deposits will play an increasingly important role in helping corporate and institutional clients manage treasury, unlock operational efficiencies and support real time liquidity management across markets,” said Mark Willis, head of emerging payments, transactions services, and digital assets at Standard Chartered, in a prepared statement.

Interoperability remains one of the main barriers to tokenized deposit adoption.

The payment transaction sent by HSBC to Standard Chartered was recorded as a tokenized deposit obligation on HSBC’s Tokenised Deposit Service and Standard Chartered’s tokenized-deposit infrastructure, while SWIFT’s blockchain platform acted as the orchestration and record-keeping layer.

“It demonstrates how digital money issued by banks can be interoperable across institutions while maintaining the integrity and regulatory oversight of the existing financial ecosystem,” Lewis Sun, head of digital currencies at HSBC, added in the statement.

The transaction comes six weeks after SWIFT made its digital ledger platform available for initial use. SWIFT officials said the ledger will gain additional functionality after its initial go-live phase.

Tokenized Deposits Benefits

Tokenized deposits differ from stablecoins by their backers and how they operate. Private institutions issue stablecoins backed by an audited reserve of highly liquid financial instruments. Tokenized deposits are digital representations of bank deposits issued by regulated financial institutions and act as direct claims on those institutions. Owners can also convert tokenized deposits back into fiat currency and restore account balances.

For corporate treasuries, tokenized deposits provide the benefits of digital money — faster settlement, programmable money, digital asset integration, and immutable transactions — while maintaining existing banking relationships and aligning with existing banking regulations.

Broader Industry Activity

HSBC and Standard Chartered’s initial transaction via the SWIFT digital ledger is only the latest of such announcements in the past several weeks. A day earlier, the Canton Network announced that tokenized deposits are live on its network with HSBC, Lloyds Bank PLC, and JPMorgan Chase & Co. in various stages of testing, TradingView reported.

In early June, U.S. payments rail operator The Clearing House, which is owned by 25 of the largest financial institutions, released plans to launch on-chain clearing and settlement of tokenized deposits within the established banking framework. 

A month later, the Cari Network announced a soon-to-launch pilot to support real-time settlement, liquidity management, and digital money movement. Unlike other initiatives backed by tier-1 institutions, Cari Network is designed by U.S. regional institutions First Horizon Corp., Huntington Bancshares Inc., KeyBank National Association,  M&T Bank Corp., Old National Bancorp, and SouthState Bank Corp.

The importance of these projects is less about how they achieve results and more about whether they can provide faster settlement, lower reconciliation costs, and real-time cash management. The next step will be whether these pilots develop into production-quality systems that can deliver interoperability and meet regulatory obligations across various jurisdictions.

Rob Daly covers fintech and the economy. Contact him at rdaly@gfmag.com. 

Import businesses have felt the impact as rerouted cargo vessels clog unprepared African ports, tying up inventory.

Asset-light corporations are becoming asset-heavier organizations as the on-again, off-again closure of the Strait of Hormuz continues to disrupt global supply chains.

During the 30 days preceding Aug. 17, an average of 16.9 ships passed through the Strait transporting 2.2 million barrels of crude and 380,000 barrels of petrochemicals, as reported by The Strait of Hormuz Ship Monitor. By comparison, during the first quarter of 2025, the U.S. Energy Information Administration estimated that 14.2 million barrels and 5.9 million barrels of petroleum products were shipped daily through the waterway — a decrease of approximately 84% and 94%, respectively.

According to the Atlas Institute for International Affairs, the Cape route is becoming the default option for vessels. As a result, import businesses have felt the impact as rerouted cargo vessels clog unprepared African ports, tying up inventory even longer.

Bolstering inventories and increasing liquidity buffers may initially have been a short-term response to the disruption, but industry insiders view the change as permanent.

“Just-in-time has become just-in-case, and that converted inventory is now on the CFO’s balance sheet,” John Stevens, senior vice president and global head of financial institutions and working capital at Kybira, told Global Finance. ”Higher [days inventory outstanding] stretches the cash conversion cycle and that cash has to come from somewhere: You borrow it or extend supplier terms.”

Adding Days

According to the authors of Allianz Trade’s Days Sales Outstanding (DSO) & Cash Collection Cycle (CCC) report, published in July, the disruption is expected to add a global average of two days to the CCC in the second half as its effects permeate supply chains.

The authors also expected that the U.S.-Iran conflict would result in a lighter version of the 2022 supply chain shock, little appearing in listed firms’ first-half financials and more tangible in the second half as the disruption permeates supply chains with a lag.

“Electronics, pharmaceuticals, textiles, automotive suppliers, metals and paper face the most direct pressure: already inventory-heavy and running elevated cycles, they have the least room to absorb a further DIO rise without tipping their financing needs into distress territory,” they wrote. “Construction and machinery & equipment carry the largest absolute cycles (approximately 103 days) and are unlikely to escape a broad inventory rebuild. Second, the shock should be partly offset by continued private-sector spending on AI infrastructure and data centers, which supports computers & telecoms and software & IT, keeping a meaningful share of the economy on a compressing or at worst flat trajectory.”

Inventory’s Cost

“Every day of DIO you add is cash pulled out of circulation, and that comes at a premium at current financing costs,” said Stevens. “CFOs should be pricing the free cash flow hits before any DIO build-up.”

Companies should count days and dollars rather than units, he added. “Any universal number, in either units or DIO, is a guess. Transit patterns through the Strait of Hormuz have been highly volatile, with flows falling sharply and recovery remaining uneven.”

There is light at the end of the tunnel — if a company’s balance sheet is large enough.

“Large, investment-grade buyers may be better placed to fund inventory builds, while their mid-market suppliers may not be,” said Stevens. “If payment terms are stretched to fund DIO extensions, the biggest squeeze can land one or two tiers down the value chain. Supply-chain finance can help address that gap when it is structured transparently and appropriately.”

Rob Daly covers fintech and the economy. Contact him at rdaly@gfmag.com. 

Deepening political, social, and cultural ties opens a fertile financial market.

Africa’s position as a corridor for capital, trade, and investment is capturing the attention of Middle Eastern banks.

For decades, the continent was a preserve of Western lenders. Today, most have exited due to stringent regulatory requirements in their home markets, leaving Africa’s homegrown banks to fill the void. But the dynamics are changing again as Gulf banks venture into Africa to exploit deepening ties cutting across political, socio-economic, cultural, and religious spheres.

The influx into Africa is striking. In August, Emirates NBD Bank PJSC made a statement of its determination to control the United Arab Emirates-Egypt corridor by acquiring HSBC Egypt’s retail business. Emirates NBD Group CEO Shayne Nelson called the acquisition an important milestone in the execution of the bank’s regional growth strategy. 

“The transaction strengthens our presence and supports our ambition to continue growing our customer franchise,” he said.

Emirates NBD, which boasted $317 billion in assets in 2025, is not the only Middle East bank that is bullish on Africa. First Abu Dhabi Bank PJSC (FAB), the biggest in the Middle East-North Africa region by assets at $382.2 billion with a presence in 20 markets including Egypt and Libya, announced earlier this year that it would open its first sub-Saharan representative office in Lagos, and in July said it would be applying for a banking license in South Africa.

Other lenders are strengthening their footing in Africa through targeted investments and collaborative ventures. Among them is Qatar National Bank QPSC (QNB), which controls a 20.1% stake in Ecobank, the leading pan-African bank with a presence in 35 markets. Ecobank posted a $423 million profit before tax in the first half of this year.

Bahrain’s Al Baraka, the UAE’s Mashreq Bank, and Dubai-based Soren Investment Co., which last year purchased a controlling stake of 42.8% in Kenya’s Gulf African Bank, to are also making forays into the continent.

Tighter Connections

The scramble by Gulf lenders is not a fluke. They see a market awash with opportunities cutting across Islamic banking, international payments, capital flows due to growing trade, foreign direct investment (FDI), and remittances and labor ties.

Bilateral trade between the Middle East and Africa stood most recently at $260 billion, while FDI exceeded $100 billion over the decade from 2012 to 2022. The Gulf Cooperation Council states are also a major source of remittances to Africa. Last year, these amounted to $28.3 billion, dwarfing the $1.1 billion the continent received from the GCC in development assistance.  

Another area of opportunity is Islamic finance, cutting across Shariah-compliant banking, bonds, insurance (Takaful), Islamic fintechs, among other businesses. While Africa is home to 600 million Muslims, its contribution to the global pool of Islamic financial services was just $30.7 billion in 2025, or a mere 0.7% of the global total of $4.4 trillion. Even in Senegal, where 94% of the population is Muslim, Islamic banking assets accounted for a mere 8.3% of total banking assets in 2024.

 “Islamic finance offers a compelling blueprint for strengthening regional financial resilience and economic integration,” said Suleiman Walhad, president of the Horn of Africa States research group.

John Njiraini is a contributing writer based in Kenya.