Due to the massive earthquake that struck the eastern part of Japan, many issuers who were planning to issue corporate bonds are now being forced to review their funding plans, says Mizuho in its Custody news update for April 2011.
“The sharp drop of the stock market and the trend in which investors are getting more risk-averting made it extremely hard for issuers to find buyers of their bonds,” says Mizuho.
For example, investors that were looking to buy Japanese bonds have seen a raft of corporate issuance cancelled.
Nippon Airways postponed the issuance of the corporate bonds for individual investors, which was scheduled on April 1, 2011. ANA had planned to issue 3 years-bonds up to JPY 30 billion. NICHIAS Corporation, a manufacturer of industrial products, also postponed the issuance of the corporate bonds in the amount of JPY 5 billion scheduled at the end of March.
“Some markets participants have expressed their concerns to the outlook of electric company bonds [as well],” says Mizuho. “Electric company bonds have been attracting investors backed by their high credit rating next to government bonds. However, electric company bonds seem to be losing market confidence due to the recent crisis at the nuclear power plant. Although some experts view this case as inherent to Tokyo Electric Power Company and not to other electric power companies. The concern may linger if it takes long time to resolve the crisis.”
(LB)