Japan's foreign debt Market Overview
the Japanese foreign debt market two parts is divided into the foreign bond market and the Euroyen bonds, foreign bonds and Samurai bonds, general debt and the name of debt.
Euroyen bonds
Euroyen bonds are even the value of currency in yen bonds issued outside Japan. Called non-resident European bonds issued by non-residents; called the residents of Euroyen bonds issued by residents. Euroyen bonds issued in Japanese yen raised bond is basically the same, but its control is much more loose than the public offering bonds. It needs only the consent of the Finance Minister's approval to issue, the issue is not required to prepare a large number of documents, issuance costs much less than the public offering of the Bonds.
First European bonds is 10 billion yen bonds issued in 1977 by the European Investment Bank, after a number of issuers have also issued. March 1979, the borrower is limited to international organizations, and later to allow previously issued Samurai bonds and the rating of AAA by foreign governments and government agencies to issue Euroyen bonds. Cautious because the Japanese government on Euroyen bond issuance to worry about the large number of Japan's international balance of payments issue will have a negative impact, and thus until 1984, the circulation is not large, generally every quarter, only allowed to issue a and a strictly limited issue amount. At the same time, increasing Japan's international balance of payments surplus, the foreign demand for the yen. In this case, the United States by the yen dollar Committee to put pressure on Japan to relax restrictions on Euroyen bonds issued. In 1984, Japan has taken a number of measures, including: (1) the issuer from international agencies, foreign governments expanded to foreign local governments, government agencies and private enterprises; (2) public bond issues qualified by AAA drop to A; while allowing the A rating of private companies to issue Euroyen bonds; (3) the removal of restrictions on the issue of items and each amount; (4) to expand the issue of the Lord Director General range, to allow foreign securities institutions to serve as the main Director-General.
In April 1985, the Japanese government is allowed to issue Euroyen bonds by the issuer with the issue of eligibility of units outstanding guarantees. 1986 to further relax restrictions on foreign banks to issue Euroyen bonds. Japan's deregulation in 1984, had the duration of the Euroyen bonds, and the "freeze period" (frozenperiod) to be provided, the requirements for periods of not less than five years, and provides for the freezing period of 180 days, ie less than 180 days after issuance domestic investors may not purchase, the purpose is to slow down the Euroyen bond issue on the impact of domestic financial markets. However, this measure is in fact not prevent domestic investors to buy Euroyen bonds at issue. Since then in turn freeze shortened to 90 days. The rapid development of
Euroyen bond market, in addition to the deregulation of reason, but also with the following two factors World Steel Pipe News . First, swap the motivation that many issuers in order to obtain yen funds, but hope that the yen will be raised through the exchange of business into dollars and other currencies, thereby reducing the cost of financing. This is an important reason for the Euroyen bonds rapidly increasing. It is estimated that about 90% of Euroyen bonds and swaps. Second, financial innovation. April 1985, the Ministry of Finance to allow the issue of dual currency bondsWorld Steel Pipe , zero coupon bonds, deep discount bonds and floating rate bonds. These innovative tools with the use of swap opportunities related to, resulting in the issue. Innovative financial instruments to stimulate the development of the yen bond market in Europe.
Foreign bonds
Samurai bonds (SamuraiBond) known as the yen in foreign bonds, that is non-yen bond denomination bonds issued by residents in the Japanese market. In accordance with the provisions of the Foreign Exchange Management Act, the issue of yen in foreign bonds must apply to the Japanese Ministry of Finance for approval issue. Period ranging from 5 to 15 years, and the issue is unsecured.
First samurai bonds issued by the Asian Development Bank in 1970 and thereafter issued by the World Bank and the Inter-American Development Bank, two private samurai bonds. The beginning of the formation of the yen in foreign bonds market, the Japanese Government to the development of the market to take strict control of the attitude, only allows the issue with Japan close to sovereign entities, and thus slow the development of the market throughout the 1970s until the 1980s was a rapid development . The Samurai bond market initially not to private borrowers open to change this situation until 1979. Unsecured debt, an American Enterprise (SearsRoebuck) was released in Japan in 1979 but very little since the issuance of Samurai bonds, private borrowers.
. Name debt (Dairnyobond), is the innovation on the foreign bond market. Actual warrior debt and the European Day without bond advantages of the combination of. The first name bond is issued by the World Bank in 1987, the same year the World Bank released the second tranche. These two bonds are issued in Tokyo, but listed on the Luxembourg Stock Exchange. These two bonds do not impose a withholding tax, and its transactions can be carried out by Seidel (Cedel) and European clearing systems (the Euroclear) liquidation.
3. General debt (Shogunbond). Is actually the Tokyo foreign currency bonds in the Japanese market by non-residents raised issue of bonds denominated in non-yen currencies. According to the Foreign Exchange Management Act, the general debt issuance practices and samurai bonds. In addition, foreign currency bonds issued by private placement in the Tokyo capital market to called the Geisha bonds (GeishaBonds).
General from August 1985, the debt issue was issued pen, $ 932 million dollars. General debt is initially limited to the issue of international organizations and foreign governments, U.S. tax law changes in 1986, the United States fund-raising by the market interest. Under the revised U.S. tax law, U.S. companies in foreign countries issued for a period of more than 1 year bearer bonds without violation of tax laws. General debt issuance requirements are reduced. In October 1985, Southern California Edison Company as the first private financing issue general debt, but since then the circulation has been small, less than $ 1,000,000,000 a year. The main reason is the time of registration of the general debt is relatively long, documentation requirements are also very complicated, the lack of flexibility. In 1988, the Ministry of Finance to take some measures, the general debt issued for greater flexibility.
Samurai bond market is very low in developing countries, the proportion of the general bond market. Such as 1986, only China issued a $ 87 million, while other countries and international organizations issued a total of more than 800 million U.S. dollars.