Secure Returns in Uncertain Times: Why Nomura's Euro Senior Notes 2030 Offer a Rare Value Proposition

Amid rising geopolitical tensions, fluctuating central bank policies, and the lingering shadow of post-pandemic volatility, investors face a critical dilemma: how to secure stable income without compromising safety. Enter Nomura Holdings, Inc., whose recently issued Euro-denominated senior notes due 2030 present a compelling fixed-income opportunity. Priced at 3.459% yield and structured to meet Japan's stringent Total Loss-Absorbing Capacity (TLAC) standards, these notes offer a rare blend of regulatory-backed security, yield superiority, and diversification potential—all at a pivotal moment for global markets.

The Case for TLAC-Compliant Debt

The cornerstone of this investment thesis is the TLAC eligibility of the notes. Enforced by Japan's Financial Services Agency since March 2021, TLAC requirements mandate that global systemically important banks (G-SIBs) like Nomura hold sufficient loss-absorbing capacity to avoid taxpayer bailouts during crises. The 2030 notes, issued under Nomura's Euro Note Programme, are explicitly designed to qualify as TLAC-eligible senior unsecured debt. This designation ensures they rank higher in the capital structure than subordinated debt, offering investors a critical layer of protection in stressed scenarios.

For institutional investors, TLAC compliance is not just a regulatory box-ticking exercise—it's a risk mitigation tool. The notes' structure aligns with the Financial Stability Board's global framework, which emphasizes that such instruments must have at least one year to maturity (here, a 5-year tenor) and avoid clauses that could enable early redemption at the issuer's discretion. Nomura's fixed-rate notes, maturing in May 2030, satisfy these criteria decisively.

Yield Advantage in a Low-Rate World

The 3.459% coupon on these notes stands out in a landscape where Eurozone government bonds are yielding far less. As of Q2 2025, the 5-year Eurozone Central Government Bond Par Yield hovers at 2.45%, a full 100 basis points below Nomura's offering. This spread widens further when considering that the ECB's benchmark rate is projected to remain elevated through 2025, yet corporate credit still outperforms sovereign debt in terms of returns.

The yield gap is particularly striking given Nomura's robust credit profile. Fitch Ratings assigned the notes an ‘A-' rating on May 19, 2025, reflecting their seniority and the firm's strong capitalization. While Nomura's parent company carries a BBB+ rating from S&P, the notes' A- rating underscores their standalone creditworthiness as TLAC instruments. This bifurcation in ratings—higher for the notes than the issuer—is standard for TLAC-eligible debt, as these securities are structured to absorb losses before impacting the broader balance sheet.

Strategic Diversification for Non-U.S. Portfolios

The notes' issuance terms also cater to investors seeking geographic and currency diversification. Sold exclusively outside the U.S. under Regulation S, the notes avoid the complexities of SEC registration, making them accessible to institutional investors in Europe, Asia, and other regions. The EUR 700 million issue size ensures liquidity, while the 5-year tenor aligns neatly with current macroeconomic forecasts:

• Rate Cycle Timing: With the ECB expected to stabilize rates by mid-2025 and the U.S. Federal Reserve on a potential pause, a five-year horizon minimizes reinvestment risk.
• Currency Stability: The euro's role as a reserve currency buffers against dollar-centric volatility, a critical hedge for portfolios overexposed to the U.S.

The parent company's stock performance further reinforces confidence. Despite market turbulence, Nomura's share price has remained resilient, reflecting its diversified revenue streams (Wealth Management, Investment Banking, Global Markets) and strong capital ratios (Tier 1 capital ratio of 14.5% as of Q1 2025).

A Call for Action: Seizing the Window

The combination of TLAC compliance, yield premium, and strategic diversification benefits positions these notes as a must-consider holding for institutional fixed-income portfolios. Key advantages include:
1. Safety First: Regulatory rigor ensures these notes are loss-absorbing assets in a crisis, offering superior seniority over subordinated debt.
2. Income Generation: Outperforming government bonds by 100 bps in a low-yield environment, these notes provide unmatched income stability.
3. Geopolitical Hedge: Exposure to Japan's financial powerhouse, a leader in Asian capital markets, diversifies risks tied to European or North American-centric investments.

With settlement already completed (May 27, 2025) and interest payments commencing in May 2026, the window to secure these notes is closing. For investors prioritizing risk-adjusted returns in an uncertain market, Nomura's 2030 Euro Senior Notes are a strategic move that delivers on safety, yield, and diversification—all at once.

Act now before the yield advantage narrows further—or the opportunity slips away.

Investment decisions should be made with due consideration of personal risk tolerance and portfolio objectives. Past performance is not indicative of future results.