Japanese companies are expanding their toolkit to deal with the steepest borrowing costs in a generation, including considering sales of strategic shareholdings and other assets to offset the impact, a Bloomberg News survey shows.<\/p>\n
Other measures under deliberation include borrowing more overseas and bringing forward funding plans, a survey of 30 Japanese nonfinancial companies with outstanding yen bonds shows. Results are based on replies from 14 firms gathered in August.<\/p>\n
With Japan\u2019s 10-year government bond yield touching 3% for the first time in three decades this week and the Bank of Japan\u2019s policy stance becoming increasingly a topic of U.S.-Japan discussion, how Japanese corporates tackle rising funding costs also has the capacity to sway global markets, as it has in the past.<\/p>\n
In their survey responses, mobile carrier KDDI said using asset sales to reduce its debt was one potential step, while Chugoku Electric Power said higher rates could lead it to accelerate sales of assets and strategic shareholdings.<\/p>\n
Japanese companies are already grappling with the highest borrowing costs at home in more than a quarter of a century, and with pressure on the BOJ to lift policy rates further, firms are looking for ways to limit the hit to their bottom line. The average cost for companies to sell yen bonds has climbed 10-fold from a decade ago when the BOJ introduced its negative interest rate policy, and while that era is consigned to the past, many companies still need to refinance large chunks of that earlier borrowing at a higher cost.<\/p>\n
The 30 companies contacted in the survey have a total of \u00a56.74 trillion ($42.1 billion) of bonds maturing from Sept. 1 to Aug. 31, 2028.<\/p>\n
Toyota Motor and Tohoku Electric Power said in replies that if they refinance their yen-denominated notes maturing over the next two years, their annual interest expenses would increase by more than 30% compared with current levels.<\/p>\n
\u201cRising interest rates may already be starting to weigh on capital investment,\u201d Shumpei Fujita, a researcher at Mitsubishi UFJ Research & Consulting wrote in a recent report. There are signs of more restrained growth in capital expenditure in industries that have faced larger increases in the cost of capital in the past two years such as in metal products or electricity and gas, he added.<\/p>\n
Still, with company profits surging as a whole and the build-out of AI capacities driving expenditures, the corporate sector is coping fairly well. Higher borrowing costs are, however, starting to feed into investment decisions, the survey shows.<\/p>\n
Daiwa House Industry expressed concern that rising rates could affect real estate prices in its reply. The company said that it will need to review its minimum required return, or what\u2019s referred to as the hurdle rate, on property investments as the interest-rate environment shifts.<\/p>\n
In its response, Tokyo Electric Power Company Power Grid said it had brought forward funding in the last six months or was considering doing so.<\/p>\n
By contrast, utility peer JERA said that, in addition to foreign-currency funding, it would use interest-rate swaps and broaden its investor base to strengthen its foundation for stable financing.<\/p>\n
JERA sold a dollar bond last month, and Japanese issuers, in general, have sold more than $110 billion worth of dollar or euro-denominated notes so far this year, by far the largest single group in the Asia Pacific. The ability to obtain funding in foreign currencies at levels comparable or sometimes lower than in Japan when proceeds are swapped back to yen has helped drive those overseas debt sales.<\/p>\n","protected":false},"excerpt":{"rendered":"Japanese companies are expanding their toolkit to deal with the steepest borrowing costs in a generation, including considering…\n","protected":false},"author":2,"featured_media":84956,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[1713,2726,8,17,6112,2787,1203],"class_list":["post-84955","post","type-post","status-publish","format-standard","has-post-thumbnail","category-japan","tag-boj","tag-bonds","tag-japan","tag-japanese","tag-jgb","tag-surveys","tag-yen"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/84955","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/comments?post=84955"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/posts\/84955\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media\/84956"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/media?parent=84955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/categories?post=84955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/japan\/wp-json\/wp\/v2\/tags?post=84955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}