THE urban myth of capital markets lurks in the world of project finance: the wall of Japanese money. This urban myth is likely to chime with investment bankers from the good old days of the 1980s. Back then, traders of Bunds or OATs were always waiting for a wall of Japanese institutional cash that would pour into their markets, hammering yields down in the process.

It never quite happened. And that wouldn’t be surprising, as the bursting of the 1980s Japanese credit bubble via the sharp monetary tightening of Bank of Japan governor Mieno sent Japanese government bond yields sharply higher. The spread versus European government bond paper simply didn’t justify the trade. European bond traders were left waiting breathlessly for a wall of money that resolutely remained rooted in its foundations at home.

However, it’s very different now. Japanese bonds were in negatively-yielding territory as recently as September and offer just under 1% for an extension of up to 20 and 30 years.

The collapse of Japanese bond yields, thanks to the aggressive monetary policy of governor Kuroda at the Bank of Japan, has led Japanese banks and other institutional investors to seek returns in alternative asset classes. Right in the middle of their radar screens is project finance.

The Japanese banks have led the charge in recent years, and their presence has been a boon to the global project finance market, which saw volume decline by around 5% last year. And following in their slipstream is the latest addition to the Japanese bid for global project finance: the life insurance companies.

The most conspicuous of these, in terms of ambition to book overseas project finance assets, is Nippon Life Insurance, Japan’s largest life insurer by revenue with more than half a trillion dollars equivalent of assets. Nippon stated its intention earlier this year to get serious via the establishment of a team dedicated to foreign project finance investment.

The start was relatively modest, involving the booking of a US$100 million secondary loan, bought from MUFG. But since then, Nippon Life has participated in primary deals ranging from Africa to Turkey, and intends to do much more.

Given the meticulous attention to detail and consistency of follow-through which is the hallmark of the Japanese modus operandi, I would bet they are here to stay in the project finance arena, even if a normalization process in global bond yields creeps into the Japanese government bond market and turns yields definitively into positive territory.

It of course chimes with the emergence of the latest must-have fashion item in the global economy – the infrastructure project. No more so is this the case than in Southeast Asia, where the infrastructure spend is going ballistic, from Malaysia to the Philippines to Indonesia. And that’s not to mention China’s Belt Road project which stretches from Russia all the way down to Africa.

Much of the funding has been in traditional project loan format. But there’s a growing movement to fund a lot of the new build with project bonds. If the Japanese wall of money hits these, there will be an issuance bonanza of truly epic proportions.