Reply #36: Japan loses taste for convertibles

[54anickel]

http://news.ft.com/cms/s/66582e28-fd71-11d9-b224-00000e2511c8.html

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Dealogic figures show a precipitous drop in the value of Japanese convertible issuance to $1.445bn in the first half of this year, compared with $11.621bn in the first six months of 2004. These figures only include deals that have underwriting agreements or purchase agreements at a single price at a single point in time.

The fall comes amid a broader decline in global convertible issues over the past year - a trend exacerbated by a slump in convertible bond prices in the secondary market that has hurt many hedge funds.

However, the fall in Japanese issuance is many times steeper than the global decline in convertibles over the same period. And because Japanese convertible bond issuance has been a solid source of revenue for investment banks in Tokyo, it will be closely watched by the wider financial world.

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But some detect a more significant trend that is starting to change the face of corporate Japan: the spread of the western concept of shareholder activism. This has already changed corporate behaviour by boosting dividend payments, reining in capital spending and making management pay more attention of whatever large shareholders say.

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One culprit is the syndicated loans market, which "has being going from strength to strength over the last few years", according to Jason Rogers, credit analyst at Barclays Capital in Tokyo. This reflects a broader global trend, driven partly by the fact that global financial markets are now awash with liquidity.

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