Breakingviews - The end of cheap credit could hurry Japanese M&A

in a $5.9 billion deal, funded almost entirely with debt. Diversifying abroad looks attractive to many Japanese companies given weak home markets. For the $28 billion drugmaker, which already earns the bulk of its revenue from overseas, exceptionally low borrowing costs at home may have boosted its offshore appetite even more.

The country's third-largest drugmaker by sales is paying a modest-looking 22% premium to Iveric's share price before the announcement. The target's key asset, a treatment for a common cause of vision loss in the elderly, is on track to secure U.S. regulatory approval later this year. Analysts at Jefferies reckon those sales could top $85 million in its first year and peak at $2.4 billion annually by 2034.

Financing the purchase with 800 billion yen in short-term loans and commercial paper is clever and perhaps a bit aggressive. Astellas, which has been on a buying spree since 2019, sits on a net cash pile. Borrowing at the ultra-low rates available for quick-expiry debt could end up costing more if the Bank of Japan

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