Japan 2007: League tables

It has been a mixed year for Japan with the country and its capital markets able to boast of significant achievements but also facing challenging obstacles. Overall, however, the tone remains positive. Big picture-wise, the Japanese economy continues to grow at a steady 2% a year as it continues to reap the benefits of years of painful restructuring of its corporate and banking sectors. The growth is expected to continue but acceleration is unlikely because of the country’s ¥834.4trn debt. This is a major concern and a brake on stronger growth...

After a few false starts, the Japanese economy is now firmly on track, having had the longest expansion in more than 60 years. It is widely acknowledged that the most difficult reforms have been put in place – largely in the corporate and banking sectors – paving the way for a sustained recovery. Economic growth is expected to hover around the 2% mark for the next few years, largely helped by consumption and investment from the corporate sector. As a result of this corporate recovery, Japan has emerged from its long economic downturn less...

The offshore yen bond market began the year sluggishly due to concerns over the new US regulations and possible interest rate rises and only five deals were done by the middle of the year. But then the market then took off as international banks returned. The sub-prime crisis had much less of an impact on Japanese markets than those elsewhere, resulting in a wave of renewed liquidity and a rush of foreign supply as investors proved they were still amenable to bond issuance, albeit on different terms than before. Restrictions on US Samurai...

In the Financial Instruments and Exchange Law (FIEL) which became effective in September, will have far-reaching implications for the Japanese hedge fund industry. On the face of it, the law gives Japan’s hedge fund managers – typically based in Hong Kong or Singapore – greater freedom to take on money from Japanese investors in exchange for notification with the Japanese regulator. But the implications of this move, which would in theory bring offshore managers under some degree FSA control, may be more onerous. The fear is that the threat...

Japan has the world’s largest public debt. The public purse owes a whopping ¥834.4trn and the central government’s efforts to reduce this debt through cutting expenditure, including subsidies to local government, is driving an increase in municipal bond issuance. New regulations coming into effect in January will facilitate greater international investor participation in municipal bonds, which should lead to substantial market growth. The Ministry of Finance plans to issue ¥25.4trn of new government bonds in fiscal 2007 – ¥4.5trn less than it...

What a difference a year makes. After a frenzied 2006, Japanese equity markets metamorphosed into a ghost town with overall issuance down by more than 50% and moving strike convertible bond (MSCB) issuance down a staggering 95%. A sea change in conditions battered public market issuance but also resulted in a bonanza for private, structured deals. One after another bankers announced complicated and highly tailored deals including Resona Holdings' ¥350bn (US$2.93bn) preference offering, Liberty Global's ¥86.4bn block trade, Goodwill Group's...

The explosive growth of Japan's securitisation markets over the past few years waned in 2007 as the perennial drivers, RMBS and CMBS, stalled. That was matched by a failure of new product sectors such as whole business securitisations (WBS) to materialise. However, despite the gloom, Japanese markets fared relatively well in comparison to global markets with pricing remaining remarkably stable despite a global credit crisis and a ratings shock of its own. The resoluteness of Japan's securitisation market comes from the exceptional quality of...

To say that NikkoCiti’s ¥415bn (US$3.2bn) deal in June was a landmark transaction is an understatement. The Samurai portion of the deal was the largest of its kind and the largest ever for Citi in any currency, marking the importance of the Japanese market for the firm. Fixed income co-head Brian Mccappin said more jumbo deals could follow. “The Japanese market is extremely important for Citi in almost every area of business but also as part of its global funding,” Mccappin said. “Clearly with the Nikko partnership, Citi is striving to become...