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 month-end 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 lump-sum issuance
system, in which all corporate bonds are issued at month-end,
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 so-called proposal method abolishes the practice of
taking lead-managership and enables more market-oriented
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 wide-ranging 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 non-collateral straight and
convertible bonds from March 1, securities managers said.
    The cut will more than double the number of corporations
able to make non-collateral 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.
 REUTER
