Asians 'key' samurai market borrowers

Asians 'key' samurai market borrowers

TOKYO (Reuter): Asian fund-raisers could become the key
borrowers in the samurai market after the recent boom in dual-
currency samurai issuing ended abruptly due to the dollar's fall
against the yen, underwriting sources said yesterday.

With the issuance of dual samurais grinding to a halt in June,
the samurai market was dominated by issuers from Hong Kong,
Taiwan, South Korea and Indonesia during the month, with a South
African bond also being issued.

"There are geographical benefits for Asian borrowers to issue
in Japan. Japan is also very familiar to them," said Masaru
Hamazaki, deputy manager at Yamaichi Research Institute.

"Without dual-currency bonds, the samurai market will likely
be dominated by Asian borrowers," he said.

Record-low interest rates in Japan will also attract stronger
interest by issuers.

The capacity in the samurai market is likely to shrink to
where it was two years ago without the issuance of dual-currency
samurais, while the market will lure fund raisers with borrowers
carrying lower credit ratings, they said.

"The countries or firms with lower credit ratings like to
raise funds in the samurai market as they can raise at a lower
cost than in the euro market. That is the reason the Asians will
be the key borrower in the samurai market," Hamazaki said.

Samurai bond issuing volume plunged to its lowest level in
June since May 1995 and there was no issuance of dual-currency
samurais during the month, the first time that has happened since
August 1995.

Underwriters said overall samurai issues are expected to
average about 100 billion yen per month, with eastern European
and other emerging market likely to be the key fund-raisers along
with the Asian borrowers.

Underwriters said that China, especially the banking
affiliates of the central bank of China, and fund raisers from
South Korea, could issue regularly in the future.

As long as the dollar does not make a dynamic recovery, the
Asians are expected to lead the samurai market, they said.

"Underwriters are still looking for chances to offer the dual-
currency bonds in the samurai market again," a senior underwriter
said.

Dual-currency samurai bond volume soared in 1996, amounting to
2.4 trillion yen compared with the previous record of 600 billion
yen in 1995.

During the past two years, many corporations made successful
debuts in the samurai markets by issuing large volume of dual-
currency samurai bonds for retail investors, with many of them
issued by new faces from western firms.