June 2001
Borrowing begins at home
With the domestic economy still in a weak state, Japanese corporates are reluctant to go to the relatively expensive international bond markets for funding. Domestic borrowing is cheaper, particularly as banks are being encouraged by the government to lend on easy terms despite the hangover of bad debt. Only the highest rated Japanese borrowers are raising funds in international markets.
After something of a rush in 2000, the flow of Japanese issuers
raising money in international markets looks to have tailed off in
2001, with little prospect that activity will significantly pick up
in the near future. However, although credit risk concerns mean
that Japanese banks and corporates will get a lukewarm response
from international investors, at least the markets still remain
open to a select group: the government-backed and public
institutions.
Familiar names such as the Japan Bank for International
Cooperation (JBIC) and the Development Bank of Japan (DBJ),
alongside public works and utility companies such as Japan Highway,
which issued $500 million in March 2001, have been able to raise
cash, but corporate borrowers have been rare.
"Generally, there has been very little activity in the
international markets from Japanese organizations in the past
year," says Hideyuki Kawashima, head of syndicate at Mizuho
International in London. "Of course, some Japanese
government-guaranteed...
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