Amadeusz Juskowiak

Japan plans more flexible corporate bond issues

Japanese securities houses will issue new corporate bonds more quickly accept issue requests throughout the month instead of at monthend and introduce a competitive underwriting method from April 1 to bring Japanese firms back to the Tokyo bond market securities managers said

Domestic issues have slowed to a trickle as more and more companies turn to more flexible overseas markets for cash but the proposed moves are expected to pave the way for a review of public bond issues they said

Relaxation of issue rules would be better applied not only to straight corporate bonds but also convertible bonds and warrant bonds to call back issuers effectively from overseas markets a Nikko Securities house bond manager said

Securities houses will launch an issue about 10 days after a corporate declaration of intent instead of 25 days as now the securities managers said

Underwriters are expected to abolish the lumpsum issuance system in which all corporate bonds are issued at monthend and accept issue requests during the month they said

Securities houses also plan to introduce free competition among underwriters when negotiating with issuers over terms in order to better reflect the market securities managers said

Market participants expect the new issue methods to be applied beginning in April with the projected issue by Nippon Telegraph and Telephone Corp

The socalled proposal method abolishes the practice of taking leadmanagership and enables more marketoriented decisions on terms securities sources said

The four major Japanese securities houses now take turns underwriting corporate bonds

Setting issue terms using financial criteria prepared by securities houses and in reference to coupon rates on latest public bonds is now almost automatic they said

The new moves are based on wideranging proposals made in late December by advisers to Finance Minister Kiichi Miyazawa They were aimed at revitalising the domestic corporate bond market securities house managers said

The finance ministry commissioned banks and securities houses agreed in January to lower the eligibility ceiling for companies wanting to issue noncollateral straight and convertible bonds from March 1 securities managers said

The cut will more than double the number of corporations able to make noncollateral issues from around 70 for straight bonds and 180 for convertibles now securities managers said

The Bond Market Committee of the Securities Exchange Council also recommended introduction of a shelf registration system more use of corporate ratings systems and simplification of disclosure rules to help speed up the issuing process securities sources said

It also called for a major review of the commissioned bank system which increases the cost of issuing domestic bonds and for deregulation of private placements they said

Some of these proposals are likely to take some time to put into effect the sources said A shelf registration system would need a revision of Japanese commercial law expected in 1988 the sources said