A rapid take-off, but can the sector keep flying?

From the mid-1990s enabling legislation and corporate issuance guaranteed a rapid take-off for Japan's securitization market. But economic recovery, recapitalization of the Japanese banks and their renewed enthusiasm for holding corporate assets may leave the market dependent on consumer finance and residential mortgage deals. This might not be enough to sustain the sector. Luciano Mondellini reports.

For much of the 1990s bankers have been talking up the potential for asset securitization in Japan but, every time it seemed the market was taking off, disappointment followed. Goldman Sachs set up a structured finance capability in Tokyo in 1990 to try to build a domestic asset-backed market but had to wait until 1994 before it could arrange its first public bond, a ¥15 billion ($142.5 million) transaction for consumer-finance company Nippon Shinpan.

In the past three and a half years the business seemed finally to have established itself.

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