(Bloomberg) -- Overseas issuers sold yen bonds at the fastest pace in five years this month, chasing cheap funds before an expected interest rate hike by the Bank of Japan pushes up borrowing costs.

Lloyds Banking Group Plc priced ¥33.9 billion ($216 million) of Samurai notes on Friday, joining KKR & Co. and Deutsche Bank AG in issuing yen debt this week. That pushed up total sales of the bonds to ¥477.3 billion, the highest since 2019 for the month of May, according to data compiled by Bloomberg.

Sales of yen bonds have been brisk as borrowing costs head higher in Japan, with the 10-year government debt yield climbing above 1% this week for the first time since 2012. 

While that’s low compared with equivalent yields such as 4.47% for US 10-year Treasuries, borrowers want to get yen funds before debt costs rise too much. For Japanese investors, yen notes issued by overseas companies often offer a premium to local corporate bonds.

Overseas yen note issuers have offered an average coupon of 1.46% for deals this year, compared with 1.096% for Japanese corporate bonds, according to data compiled by Bloomberg.

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