ID :
184216
Wed, 05/25/2011 - 04:26
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Shortlink :
http://m.oananews.org//node/184216
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Nuclear Disaster Casting Pall over Japan Capital Market
Tokyo (Jiji Press)- The nuclear crisis at Tokyo Electric Power Co.'s <9501> Fukushima No. 1 plant caused by the March 11 earthquake and tsunami is rocking the Japanese capital market.
Companies are refraining from procuring funds through bond placements and new share offerings amid growing business uncertainties. No end is in sight for the unfolding crisis and Tokyo Electric's resulting supply capacity shortage is putting a damper on the economy, market sources pointed out.
Since the disaster, which hit hardest the Tohoku northeastern region, firms' fund demand itself has shrunk, too, they added.
On the corporate bond market, concerns about the creditworthiness of Tokyo Electric, the biggest issuer in the country, have increased since it became clear that compensation to be paid to those affected by the fallout from the crippled plant will run into the trillions of yen.
As a result, the yield spread between Tokyo Electric and Japanese government bonds widened to a record 2.73 percentage points on Monday, up from a prequake level of only 0.1 point. Before the quake, the company's bonds were regarded as one of the top-grade investment vehicles.
In line with rises in Tokyo Electric bond yields, the spreads between other major bonds and JGB yields have expanded by 0.05-0.15 point, because the power utility bonds, several hundred billion yen of which have been issued annually, have been a market trend setter.
The higher yields also stemmed from investors shifting funds to JGBs from corporate bonds, market sources said.
In April, Nissan Motor Co. <7201> was the only nonfinancial company to issue bonds.
Including bonds placed by financial institutions, the overall issue amount in the month plunged 57 pct from a year earlier to 515.4 billion yen, the lowest April level since 1996.
Seiichiro Matsumoto, a credit analyst at Mizuho Securities Co. <8606>, however, said the yields on bonds other than those of Tokyo Electric have declined from their peak levels, forecasting "the market will recover when demand for postquake reconstruction expands in the autumn."
The radiation problem is also casting a pall over the equity market.
The value of public stock offerings by Japanese companies in April dropped 70 pct to about 20 billion yen. Three companies put off their initial public offerings after the disaster.
Tsuyoshi Kawata, chief of the international market analysis division at SMBC Nikko Securities Inc., said, "Japanese economic uncertainties will linger, at least until January," when Tokyo Electric hopes to have the crippled nuclear power plant under control.
Companies are likely to resume initial public offerings in the autumn, he said. "But full recovery of the issue market will not come until 2012 at the earliest."
Companies are refraining from procuring funds through bond placements and new share offerings amid growing business uncertainties. No end is in sight for the unfolding crisis and Tokyo Electric's resulting supply capacity shortage is putting a damper on the economy, market sources pointed out.
Since the disaster, which hit hardest the Tohoku northeastern region, firms' fund demand itself has shrunk, too, they added.
On the corporate bond market, concerns about the creditworthiness of Tokyo Electric, the biggest issuer in the country, have increased since it became clear that compensation to be paid to those affected by the fallout from the crippled plant will run into the trillions of yen.
As a result, the yield spread between Tokyo Electric and Japanese government bonds widened to a record 2.73 percentage points on Monday, up from a prequake level of only 0.1 point. Before the quake, the company's bonds were regarded as one of the top-grade investment vehicles.
In line with rises in Tokyo Electric bond yields, the spreads between other major bonds and JGB yields have expanded by 0.05-0.15 point, because the power utility bonds, several hundred billion yen of which have been issued annually, have been a market trend setter.
The higher yields also stemmed from investors shifting funds to JGBs from corporate bonds, market sources said.
In April, Nissan Motor Co. <7201> was the only nonfinancial company to issue bonds.
Including bonds placed by financial institutions, the overall issue amount in the month plunged 57 pct from a year earlier to 515.4 billion yen, the lowest April level since 1996.
Seiichiro Matsumoto, a credit analyst at Mizuho Securities Co. <8606>, however, said the yields on bonds other than those of Tokyo Electric have declined from their peak levels, forecasting "the market will recover when demand for postquake reconstruction expands in the autumn."
The radiation problem is also casting a pall over the equity market.
The value of public stock offerings by Japanese companies in April dropped 70 pct to about 20 billion yen. Three companies put off their initial public offerings after the disaster.
Tsuyoshi Kawata, chief of the international market analysis division at SMBC Nikko Securities Inc., said, "Japanese economic uncertainties will linger, at least until January," when Tokyo Electric hopes to have the crippled nuclear power plant under control.
Companies are likely to resume initial public offerings in the autumn, he said. "But full recovery of the issue market will not come until 2012 at the earliest."
