THE DECISION OF Moody's Investors Service to place Japan's
sovereign credit ratings on review with negative outlook suggests
that the risk of default, however remote, is rising amid growing
government debt, economic stagnation and the ineffectiveness of
traditional monetary policy. As investors become more concerned,
this has had a sometimes surprising impact on the way different
classes of Japanese issuers are approaching the debt capital
markets.
In the international markets, issues by Japanese government
guaranteed issuers (JGGIs) are still being well received. In
February this year government-backed issuer Japan Finance
Corporation for Municipal Enterprises (JFM) completed its debut
issue in the global yen market. At ¥130 billion ($1.04 billion),
this was also the largest ever done by a Japanese issuer. The
global yen offering was rated Aa1, while JGBs are rated Aa3.
The bonds were issued shortly after Moody's announced in February
that it: "will review for possible downgrade...
