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Opinion

Against the Tide: Japan bond issues: Breaking out of bondage

Japanese bond issuance sharply increased in the first nine months of this year as borrowers rushed to raise funds before interest rates rose. But the revival might fade next year. Charles Olivier reports from Tokyo on changing attitudes to capital-raising

It had to come. After years of disappointingly low issuance, the Japanese domestic bond market has at last begun to bloom. Japanese companies issued more than ¥6,950 billion ($69 billion) of bonds and ¥189 billion of private debt placements in the first nine months of 1996, according to the Bond Underwriters Association of Japan. Total issuance for the year could be as much as ¥10,000 billion, nearly double the ¥5,046 billion that was issued in the whole of 1995.

Local bankers believe the spate of issuance will continue as more electricity utility companies begin to tap the market. "We have seen historically high levels of issuance this year," says Noriyki Ushiyama, deputy general manager of capital markets at Nomura Securities in Tokyo. "And I think we will see similar amounts next year." Capital expenditure increased by more than 7% in the first half of 1996 and corporate investment levels are rising.

International issuance by Japanese borrowers has also increased, although at a less spectacular rate. Between January and September 1996, more than $38.4 billion of debt was issued by Japanese borrowers according to Capital DATA Bondware, close to the $44.6

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