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The Impact of the Financial Crisis on the Japanese Bond Market

The Impact of the Financial Crisis on the Japanese Bond Market. Hideaki Matsunaga General Manager Self-regulation Division 2 Japan Securities Dealers Association. Influence on JGB Market Influence on Corporate Bond Market etc. JSDA Actions. Influence on JGB Market. Primary Market

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The Impact of the Financial Crisis on the Japanese Bond Market

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  1. The Impact of the Financial Crisis on the Japanese Bond Market Hideaki Matsunaga General Manager Self-regulation Division 2 Japan Securities Dealers Association

  2. Influence on JGB Market • Influence on Corporate Bond Market etc. • JSDA Actions

  3. Influence on JGB Market • Primary Market 　・Lehman did not execute payment for their bid 　　　　　　　　　（Amount of issuance decreased） ⇒　Affected the settlement of JGBs which Lehman had already sold • Secondary Market 　　　　　　 ･Delivery failures occurred at high level becauseLehman failed to settle its transactions 　　　　　　　　・Influence on Repo Market ⇒Concern over default risk and delivery failure led to greater selectivity of counterparties

  4. Impact on Corporate Bond Market • Low Grade Corporate Bond (BBB) Issuance Became More Difficult Amount of Corporate Bond Issuance by Rating

  5. 100% 80% 60% 40% 20% 0% H1, FY2006 H2, FY2006 H1, FY2007 H2, FY2007 H1, FY2008 H2, FY2008 H1, FY2009 ＡＡＡ ＡＡ Ａ ＢＢＢ Corporate Bond Issuance Composition by Rating (number of issues)

  6. Corporate Bond Issuance by Industry

  7. JSDA Actions Now Under Consideration • Establishing and Reviewing Rules and Practices Regarding Failed Deliveries in Bond Transactions • Shortening Settlement Period • Revitalizing Corporate Bond Markets

  8. Ｔｈａｎｋ　Ｙｏｕ．

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