Toshiba's Collateral on Loans Raises Bond Payment Worries
- Bond recovery rates less than expected in past Japan defaults
- Japan corporate bonds are ‘in effect subordinated’: NLI
This article is for subscribers only.
Toshiba Corp. bondholders, who have seen their investments tumble in recent months, have a new reason to worry: they may be paid only after banks in the event of a default.
The concerns surfaced after people familiar with the matter said the Tokyo-based company is offering stock holdings and real estate as collateral to lenders as it seeks additional financial support. While the move would help ensure banks continue to provide financing, if there’s a default the lenders will likely get their money back first, according to Daiwa Securities Group Inc.