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Japan to Probe Debt Market's Big Secret

  • FSA to ask local brokerages about unsold notes, official says
  • May encourage firms to improve practices if problems: Mitsui
General Images Of Japan Economy As Abe Calls Snap Election, Delays Tax Increase To Tackle Recession
Photographer: Tomohiro Ohsumi/Bloomberg
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Japanese regulators are starting to look into underwriting practices in the nation’s corporate bond market, where banks routinely say deals are successful even in cases when they are under-subscribed.

The move suggests that the potential damage to some investors in Japan’s 76 trillion yen ($669 billion) company note market is getting too big for the government to ignore. Bloomberg reported last month that underwriters in Japan failed to fully sell at least 29 percent of corporate debt offerings in September, twice the average over six months, based on interviews with investors, underwriters and issuers.