Japan Expressway Holding and Debt Repayment Agency (JEHDRA)'s 30-year Zaito agency bonds recently received the Thomson DealWatch's 2008 "Innovative Straight Bond of the Year" award. Morgan Stanley acted as sole lead-manager and book runner of the transaction - the first deep-discount notes issued in the Japanese straight bond market to date.

The ¥100bn (US$1bn) 30-year JEHDRA bonds, rated Aaa by Moody's and AAA by R&I, were priced with a coupon of 0.50 percent and issue price of 58.30.

The innovativeness of the bonds is characterized by its 41.70 percent deep-discount structure which satisfied the needs of both the issuer and investors. This scheme, which carries a long duration of approximately 27 years, equivalent to the duration of 40-year JGBs, generated strong demand from major institutional investors, especially life insurance companies, which have the need to invest in long maturity products with stable cash flow from their Asset Liability Management perspectives. The low coupon of 0.50 percent was also attractive to the issuer for saving the initial coupon payment. Thomson Reuters cited, "The deal contributed to the diversification of products in the super long sector of the Japanese capital market."

Morgan Stanley has been a pioneer in underwriting Zaito agency bonds - public-sector corporation bonds without the government guarantee - and lead-managed a number of significant offerings in Japan. The Firm was the first non-Japanese house appointed as lead manager of Japan Highway (former JEHDRA)'s domestic debt issued in 2002.