Two more foreign banks offered Samurai bonds in Japan on Friday, the latest sign that a market that ground to a halt after the failure of Lehman Brothers Holdings Inc. last fall is whirring back to life.

Export Development Canada sold Y31.6 billion worth of five-year floating-rate Samurai bonds - yen-denominated debt issued in Japan by foreign borrowers. The bonds carry a coupon of 35 basis points above three-month London interbank offered rates.

Meanwhile, Netherlands' Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., which is also known as Rabobank, raised Y27.5 billion in a five-year floating-rate note, paying a coupon of 140 basis points above Libor.

The two deals underscore how the market has come back from the dead since last September, when Lehman's failure shuttered what was one of the more active funding markets since the financial crisis hit. With Japanese investors less and less receptive to foreign credits, several companies canceled their planned Samurai sales, including Deutsche Bank AG and National Grid Gas.

The market's resurrection began in early February when Australia's Westpac Banking Corp. offered the first-ever government-guaranteed Samurai, worth Y201.3 billion.

Australia & New Zealand Banking Group. later followed suit, issuing a total of Y180 billion government-backed yen bonds in Japan's wholesale and retail markets.

One reason behind the recent revival is that, with the markets relatively calm lately, overseas issuers are in a hurry to raise funds before any other potential shock can hit, analysts say.

But others say a government guarantee - or an equivalent assurance - is a must for successful Samurai sales right now.

"One main theme for the Samurai market at the moment is support from government," said Akira Nomura, a credit analyst at Mizuho Securities. "Japanese investors are unlikely to be able to buy Samurais without government backing," as their portfolios - and risk appetite - have been damaged by the financial turmoil.

Friday's two issues fit the case: Export Development Canada is wholly owned by the Canadian government.

Although Rabobank's bonds aren't directly guaranteed by the government, the top ratings from Standard & Poor's and Moody's Investors Service and the Dutch government's October bailout of ING Groep N.V. provided similar security to domestic buyers, analysts say.

The fact that investors were willing to purchase Rabobank's debt without an explicit government guarantee could be "one sign of a gradual recovery of the credit market," said Kazuhide Tanaka, head of international debt syndication at Mitsubishi UFJ Securities, which co-led the Rabobank deal.

But he added, "it's still being tested how much room investors have to absorb a flood of Samurai issuance in a shrinking market."

Without the government guarantee, of course, Rabobank was forced to pay a far wider spread than Export Development Canada. Still, Mizuho's Nomura said other issuers may now decide to come back to the Samurai market, "if the investor base broadens on factors such as increased money flow from pension funds and easiness in tracing current prices."

 
   -By Megumi Fujikawa, Dow Jones Newswires; 813-5255-2929; megumi.fujikawa@dowjones.com
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