The CHART OF THE DAY shows that yields on six-month commercial paper issued by companies with the strongest credit rating dropped 2.5 basis points this week to 0.725 percent, the lowest level since the start of the global credit crunch in July 2007. The commercial-paper index covers companies such as Nippon Steel Corp., the world's second-largest maker, and NTT DoCoMo Inc., Japan's largest mobile-phone operator, that have an a-1+ score from Japan Rating & Investment Information, Bloomberg reported.
Borrowing costs for companies with the third-highest rating are at 2.4 percent, more than double the level before Lehman Brothers Holdings Inc. went bankrupt on Sept. 15.
"There's segmentation between high and low grade, so corporate bankruptcies may grow this year," said Susumu Kato, chief economist in Tokyo at Calyon Securities, one of the 24 primary dealers required to bid at government debt sales. "Corporate bonds with investment grades or higher will be held by the Bank of Japan."
Japan's central bank Governor Masaaki Shirakawa said today it is becoming more difficult for the nation's companies to sell debt as financial markets "deteriorate rapidly." Bankruptcies rose the most in eight years in 2008.
The BOJ may buy as much as 2 trillion yen ($22.2 billion) in commercial paper as part of its strategy to support corporate access to short-term funding, the Nikkei newspaper reported today, without saying where it got the information. The purchases represent 14 percent of the 14 trillion yen commercial-paper market and the BOJ is expected to buy securities issued by borrowers with high credit ratings, the paper said.
