2.2% 25-yr loan

Hakki Alacakaptan nucleus at superonline.com
Thu Mar 28 07:36:56 PST 2002


|| -----Original Message-----

|| From: pms

||

|| ps. Moody's just upgraded S Korea's debt rating.

||

and is threatenng to downgrade Japanese banks: http://makeashorterlink.com/?T5F01299 FT.COM asia pacific Japanese banks under threat of downgrade

Confidence in Japan's financial system was further undermined on Wednesday after a credit rating agency threatened to downgrade the country's leading banks' financial strength and junior securities ratings.

Moody's Investors Service cited concern about the continued weakening of the banks' financial fundamentals and the government's declining capacity to support them.

The move injects a note of caution into the optimism caused by the surge in the stock market over the past two months, which alleviated concerns about the value of the banks' shareholdings.

Japanese banks are plagued by non-performing loans, which analysts estimate will increase to Y25,000bn ($193,bn, E219bn) in the year ending March 31, up 41 per cent from last year.

"While systemic support measures are in place, the lack of clear reform policies may expose these institutions to increased risks in the foreseeable future," Moody's said.

The review affects the banks' financial strength rating, which is already down near the level of Argentina's banks, and junior subordinated securities obligations and preferred stock.

Moody's said the banks had eroded their resources while continuing to face risks in their market and credit portfolios, prompting the rating agency to put their financial strength under review.

The financial strength rating of the banks is already close to the bottom of Moody's rating table, with Dai-ichi Kangyo Bank, for example, at E-plus, one notch above the lowest grade of E, the rating for Argentine banks.

The agency said there was increasing uncertainty over the treatment of junior securities in the event of a recapitalisation of the banks.

The Japanese government protected debt holders when the Long Term Credit Bank and Nippon Credit Bank were nationalised but Moody's said its review would investigate whether there was an increased risk that the government would not be able or willing to do so again.

The move follows Moody's decision last month to put Japan's sovereign debt rating under review for a possible two-notch downgrade that would put the country's rating lower than Botswana's.

The review puts Japan's four largest banks - Mizuho Financial Group, Mitsubishi Tokyo Financial Group, UFJ Holdings and SMBC - under review with a negative outlook.



More information about the lbo-talk mailing list