Japan’s hybrid bond issuance is rebounding, driven by yield-hungry investors and by borrowers looking to fund acquisitions and repayments needs while avoiding equity dilution. Elevated yields and relatively wide spreads are attracting investors to these subordinated debt instruments which also get partial equity credit from rating agencies. Despite rising interest rates, hybrid bond issuance this fiscal year is set to total about ¥1.18 trillion ($7.4 billion) through September, including Sumitomo Forestry’s planned deal, the highest level since fiscal 2021.