Japanese firms stepping up procurement of funds: report

Japanese companies are stepping up issuance of shares and bonds as they need cash to invest in production and capital tie-ups, a press report said Sunday.
The value of their equity financing and bond issuance at home and abroad in the business year to March 31 is estimated at a seven-year high of 11.1 trillion yen (94 billion dollars), the Nihon Keizai Shimbun said.
It is up 10 percent from the previous year, keeping up an uptrend since the year to March 31, 2003, when it totalled 8.8 trillion yen, the leading business daily said. Fuelling the growth is higher fund demand for capital investment as well as mergers and alliances, the report said. Other factors are the recovering stock market and growing expectations of an interest rate hike, it added.
Equity financing - the corporate act of raising money by selling common or preferred stock - and bond issuance on the domestic markets are estimated at 9.6 trillion yen in the current business year, up 21 percent, the daily said. But, in overseas markets, equity financing and bond issuance by Japanese firms are expected to plunge 30 percent to 1.48 trillion yen.
Japanese companies had actively issued convertible bonds overseas until the previous business year. But in the current year they have increasingly returned home to raise money, largely due to the recovering stock market, the daily said.
On the domestic markets, equity financing by Japanese companies is expected to account for 2.7 trillion yen, up 32 percent, while corporate bond issuance is expected to hit 6.9 trillion yen, up 17 percent.
Major trading house Mitsui and Co raised 200 billion yen last month through public stock offerings, its first such fund-raising effort in 16 years, the report said.
Electronics giant Sony Corp issued 120 billion yen worth of straight bonds in September last year and 100 billion yen worth in February. But there are fears that greater equity financing will disrupt the supply-demand balance of the stock market and worsen the companies' return on equity, the daily said.