How Japan tips money down the drain

January 01, 1997

Japan's public-sector institutions have the luxury of borrowing with a guarantee from their government. But they waste the opportunity, paying as much as 10 basis points more than they should for funds. The reason: lack of professionalism and bureaucratic meddling. Garry Evans reports.

How Japan borrows too dearly
(Spreads, in basis points, over US treasuries ofselected fixed-rate dollar bonds in 1996)
Five-year issues
United Kingdom	5
World Bank	7
Inter-American Development Bank	8
General Electric	8
Crédit Local de France	11
NTT	11
Toyota	11
Bayerische Landesbank	13
Canada	14
Export-Import Bank of Japan	14
France Telecom	15
Toyota	15
10-year issues
European Investment Bank	17
World Bank	18
Österreichische Kontrollbank	23
Kansai International Airport	27
Japan Highway	28
Metropolis of Tokyo	28
Canada	29
Trans-Tokyo Bay Highway	29
Japan Highway	30
Kansai Electric Power	32
Metropolis of Tokyo	34
JFM	34
Finland	36
JFM	37
East Japan Railway	39
(Japan government guaranteed issuers are in bold)
Source: CapitalData Bondware

Japan's 12 public-sector borrowers have become a bit of a standing joke among investment bankers in London.