J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News
Issue No. 207
Thursday, December 5, 2002
++ Viewpoint: Ishihara's Tokyo Revival Bonds Debut
++ Noteworthy News
- Sumitomo Mitsui Banking Eyes 49 Percent Stake in Aozora Bank
- Fuel-Cell Cars Hit Tokyo Roads
- German METRO Group Opens its first Outlet in Chiba
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++ Viewpoint: Ishihara's Tokyo Revival Bonds Debut
Tokyo Governor Shintaro Ishihara is not alone in trying to diversify
the source of local government's revenue, but he has a special way of
getting public attention. On November 29, the Tokyo government issued
Tokyo Revival Bonds, totaling 20 billion yen. The bonds were sold out
within 75 minutes, instead of the two weeks that the government had
But for Kenji Koyama, a Tokyo government official who works for the
city's bond division, this wasn't a big surprise. "This (public
offering) was decided because of the popularity of the first in
September," Koyama says, referring to the earlier issuance of 20
billion yen in bonds. Even so, "since the day we announced the second
round, we did nothing but take phone calls from individual investors,"
"The popularity of the Tokyo bonds lies partly in the falling
credibility of bank savings," explains Hitoshi Kawai, senior manager
at the debt capital markets division of Mitsubishi Securities. Coupled
with the fact that Japan's interest rates have been hitting historic
lows, the 1,400 trillion yen in Japan's personal savings needs to be
shifted from bank savings, but bear equity markets do not provide an
attractive alternative, he says.
The name of "Tokyo" puts additional psychological value on Ishihara's
bonds -- especially among the silver generation of investors looking
for "securer and more profitable" financial products, says analyst
Tomonori Sasaki at Shinko Securities.
So-called "mini-public bonds" are new to the world of local government
financing. The Ministry of Home Management, Public Affairs and Posts
and Telecommunications deregulated local government bonds issuances
this year to make it easier for a local entity to issue bonds in a
small lot to the public. Local governments have issued bonds before
the deregulation, but most of them had been sold to specific financial
institutions that the issuer had "special connections" with ("enko" in
Japanese) or to institutional investors, leaving individual investors
out of the loop.
No local government can depend on the national government as a source
of public work nowadays. Local governments are expected to share
the financial burden of public work spending as the central government
tries to cut that area of spending.
But the fever surrounding Ishihara's bonds also seems to have to do
with the almost theatrical setting of the issuance. First, the name --
Tokyo Revival Bonds -- caught the public's attention. Industry sources
say Ishihara came up with the name. Next was the city's efforts to
connect investors on a personal level to the bonds. The government
prepared sight-seeing tours for potential investors so they could see
construction sites that would receive money from the issuance. The
money that the Tokyo government raised from the November offering is
to be used to expand the Yurikamome line that runs along Tokyo's
waterfront and rebuild the Kannana highway that runs across Tokyo.
Potential investors got on a bus to actually see these sites.
"The aim, I think, was to let investors know that their money is
actually used for something that they can see. That seemed to have
worked," says Kawai.
-- Sumie Kawakami
Tokyo Metropolitan Government (in Japanese)
"Ishihara on the Stump" from our August 2002 issue
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++ NOTEWORTHY NEWS
(Long URLs may break across two lines, so copy to your browser.)
** Sumitomo Mitsui Banking Eyes 49 Percent Stake in Aozora Bank
In Brief: Sumitomo Mitsui Banking is thinking of buying all of the
approximately 49 percent stake that Softbank holds in Aozora Bank,
formerly Nippon Credit Bank, The Nihon Keizai Shimbun reported.
If the purchase were made, Sumitomo Mitsui would turn Aozora Bank into
a de facto subsidiary of Sumitomo Mitsui Financial Group, a holding
company it established on December 2, the report said.
Commentary: Masayoshi Son, president of Softbank, has publicly
protested against the Financial Services Agency, which apparently
is worried about the possibility that a foreign buyout fund would
become a major shareholder of Aozora Bank. According to the Japanese
media, the Cerberus Group, a major US buyout fund, has expressed
interest in purchasing a capital stake.
Nippon Credit Bank was nationalized in 1998 but was recapitalized in
2000, with Softbank, Orix and Tokio Marine & Fire Insurance becoming
major shareholders. But financially troubled Softbank has been trying
to sell its shares.
The Nippon Keizai Shimbun, December 4, 2002. (password protected)
The Mainichi Newspaper, December 4, 2002. (in Japanese)
"Softbank CEO Son Says Government Pressuring Him to Keep Aozora Bank
Shares in the Family" from our September issue
** Fuel-Cell Cars Hit Tokyo Roads
In Brief: Five fuel-cell-powered cars hit the road in Tokyo's
Kasumigaseki district on December 2, the first official use of the
eco-friendly cars on public roads, the Asahi Shimbun reported.
According to the report, Toyota Motor is leasing four of its FCVH
fuel-cell vehicles to four government bodies, while Honda Motor is
renting one FCX fuel-cell model to the Cabinet Office. Toyota charges
1.2 million yen a month for a 30-month lease, while Honda charges
800,000 yen a month over one year, the newspaper said.
Commentary: Fuel-cell technology may become a buzzword in 2003.
Earlier this year, the government announced a policy to popularize
fuel-cell technology in the next three years.
The Asahi Shimbun (December 4, 2002)
"Power, Style and (Cough) Smog" from the January 2002 issue
** German Metro Group Opens its First Outlet in Chiba
In Brief: Metro Cash & Carry, a major German retailer, opened its
first wholesale store in Mihama ward, Chiba, on December 4.
Metro Cash & Carry's entry into the Japanese market has become
possible through a joint venture with Marubeni in Tokyo, says the
company's press release.
The company says the target group is professional customers from the
sectors of food retail and catering as well as institutional bulk
buyers such as canteen operators. The company hopes that traditional
Japanese retail stores that typically buy their merchandise from a
large number of wholesalers would try out new procurement avenues by
picking up all their merchandise personally from a "single-stop"
According to the Asahi Newspaper, the company already has 10,000
registered members. It expects to sell 6 billion yen worth of goods a
year, the report says.
Metro Group Press Release, December 4, 2002
The Asahi Shimbun, December 4, 2002 (in Japanese)
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