THE SWISS CHANGE THEIR MINDS
"The Japanese have failed to create an international yen market,' was the dismissive opinion of one Swiss syndication chief when asked by Euromoney about progress in the Euro-yen market only a few months ago. "They did not deregulate enough in a year [1985] when the dollar fell and I think they deliberately sabotaged the market with over-aggressive deals--to keep foreigners out.'
A crude conspiracy theory, perhaps, but one commonly held among bankers. The four main Japanese securities houses-- Nomura, Daiwa, Nikko and Yamaichi-- have certainly bought their dominance of the Euro-yen league management tables by offering tight coupons and arranging hara kiri swaps. But they may not be able to hang on to their lead for long. The Euro-yen market is becoming too big to be bought.
The glut of 17 Euro-yen issues in January this year, totalling about 325 billion, threatened to swamp investors. Yet liquidity in Euro-yen bonds has radically improved since the first major deregulation in 1984 and new buyers are being found in Switzerland and the Middle East. And next month, or in May, the Japanese Ministry of Finance is expected to announce measures designed to liberalize the market, under pressure from US authorities.