Thu, Mar 07, 2013 - Page 9 News List

Abe nuclear revival pushes sales to pre-quake high: Japan Credit

By Amina Mobley and Yusuke Miyazawa  /  Bloomberg

“Abe’s Liberal Democratic Party [LDP] is more supportive to those companies,” Hatta said.

Elsewhere in Japan’s credit markets, Marubeni Corp hired Citigroup Inc, Goldman Sachs Group Inc and JPMorgan Chase & Co to arrange fixed-income meetings that could result in a sale of US dollar-denominated debt, a person familiar with the matter said last week.

The note offering would be the first in the US currency since 2006 for Japan’s biggest trader of agricultural commodities, data compiled by Bloomberg show.

Japan’s corporate bonds handed investors a 0.41 percent return last month, compared with the 0.87 percent gain in the nation’s sovereign notes, according to Bank of America Merrill Lynch index data.

Company debt worldwide returned to 0.89 percent.

The yen weakened against the US dollar last week after Abe nominated Asian Development Bank president Haruhiko Kuroda, who has called for more monetary stimulus, to be the next Bank of Japan governor. Kuroda told the Japanese parliament on Monday that he aims to do whatever it takes to end the 15 years of deflation, and that open-ended asset purchases could start sooner than next year.

The scale and scope of the assets purchased by the central bank are so far not enough to achieve a 2 percent inflation target, Kuroda said.

Open-ended purchases are not due to start until next year.

The Japanese currency has lost 5 percent this year, the worst performer after the British pound among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.

Japan’s benchmark 10-year rate fell half a basis point to 0.64 percent as of 11:29am in Tokyo on Tuesday, matching the lowest since June 2003, when the all-time low of 0.43 percent was reached. The securities yielded 120 basis points less than similar-maturity US Treasuries, compared with 107 a year earlier, data compiled by Bloomberg show.

Domestic companies issued ¥1.01 trillion in bonds last month, the most for a February in four years, Bloomberg data show. Softbank Corp was the biggest seller, with a ¥370 billion offering.

The record earthquake and subsequent tsunami on March 11, 2011, caused meltdowns and radiation leaks at Tokyo Electric Power Co’s Fukushima Dai-ichi nuclear power plant and led to the evacuation of about 160,000 people. The switch from nuclear to gas-fired generation after the accident forced Japan to increase liquefied natural gas imports 11 percent last year.

The utilities will have to pay a fuel bill of about ¥6.8 trillion in the year ending this month, almost double that in fiscal 2010, according to the government.

Japan’s 10 regional utilities, including Tokyo Electric and Kyushu Electric, have increased borrowings since the quake as their total net debt rose by 3 percent in the past two years to ¥22 trillion, according to their latest filings.

Kyushu Electric, which has ¥1.2 trillion in outstanding bonds, is rated “A3” by Moody’s Investors Service, its fourth-lowest investment level, Bloomberg data show.

“The rating reflects the economic, financial, and political conditions that are expected to make it more difficult for Kyushu Electric to continue recovering higher costs caused by the expanded thermal power generation on a timely basis,” Moody’s, which has a negative outlook on the utility’s grade, said in a statement on Feb. 22.

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