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Subprime buyins: Nomura at Lehman’s, Mitsubishi at Morgan Stanley

As I noted in the most recent edition of Seijigiri over at Trans-Pacific Radio, on September 16 Lehman Brothers failed to make a 121 billion yen payment to the Ministry of Finance for 2 year bonds that it had agreed to purchase at auction. In addition, another 288.5 billion yen in 5 and 10 year government bonds were bid for but never paid for. The Ministry of Finance, however, apparently does not plan on making any addition bond issuances, as the non-payment for these bonds amounts to about 0.3% of this year’s total planned issue.

In other news, it appears that Nomura has bid successfully to take over Lehman’s Asia operations. Lehman was also the lead underwriter for the Urban Renaissance Agency’s planned issuance of 40 billion yen worth of bonds later this week (Remember them? Chaired by former Prime Minister Shinzo Abe, the Urban Renaissance Agency were leading the operation to build a foreigner-friendly financial district in Tokyo). Nomura will now manage the issue of these bonds.

At any rate, the Nomura buyout of Lehman’s operations reportedly cost the firm just over 20 billion yen. From December to May, Lehman’s Asia-Pacific operations posted revenues of about 147 billion yen. Although the purchase does not include real estate assets, it still gets Nomura a boost in the Asia market, where it has made some inroads in recent years. The big question now will be how many of Lehman’s former 3,000 employees in the region Nomura will be able to keep on deck. Read more

August bankruptcies up 4.2%, construction and real estate hit hard again

According to Tokyo Shoko Research, the number of bankruptcies in Japan increased 4.2% in August against last year, to 1,203. The total value of debts left behind, however, fell 0.2% to about 867.98 billion yen.

Once again, the construction industry is leading the way, with 403 firms going bust in August. That number was followed by 244 firms filed for bankruptcy in the service industry.

While the total number of bankruptcies rose slightly, and the total value of debts left behind decreased, the number of affected workers rose 42.9% to 13,704. This is the highest figure seen yet this year, and seems to hint that more large firms are indeed going under. 42% of those employees affected by August bankruptcies were tied to the construction or real estate industries. Read more

Japan’s June bankruptcies soar 11.7% - liabilities up 56.2%

Although the number of bankruptcies in Japan had decreased by 1.5% May, that good news has been fully tempered by a string of negative data on June and first-half 2008 bankruptcy numbers. First, according to Tokyo Shoko Research, 1,324 firms went bust in Japan in June, which was an 11.7% rise against June 2007. The total liability left behind from these bankruptcies stood at 492 billion yen, which was a whopping 56.2% higher than a year ago.

Another firm, Teikoku Databank, put the number of bankruptcies in June at 1,065, for an 8.1% rise year-on-year. According to Teikoku, liabilities soared 40.3% to 472 billion yen. Both TSR and Teikoku include bankruptcies involving debts of 10 million yen or more, while Teikoku only counts those cases which are administered by a bankruptcy court. Teikoku had registered a fall of 1.9% in May.

For the first half of 2008, TSR announced that 7,544 firms had declared bankruptcy, which was a 6.9% increase on the previous year. Liabilities were up 19.8% to 3.20 trillion yen. On the other hand, Teikoku’s data saw a rise of 11.6% to 6,022 cases in the first half of 2008. The total liabilities of these cases was up 17.4% to 3.02 trillion yen.

Looking at TSR’s June data, we see the construction industry leading the way with 389 bankruptcies for about 105 billion yen. Following that was service industry (254), wholesalers (198), manufacturing (185), retail (151), real estate (52), IT (45), transportation (39), finance and insurance (8), and agriculture (3).

Although the real estate industry saw far fewer bankruptcies than the leading sectors, real estate led in terms of overall liabilities in June, with 142 billion yen left behind. In part, this is being blamed on tighter bank lending to real estate development firms (even as bank lending looks to be growing slightly), which has led to downward pressure on property values. More on this to follow.

FY2007 bankruptcies up 18.4%, March bankruptcies up 23.0%

Neither of these figures are huge surprises, given the context of uncertainty in Japan’s markets right now, but they are worrisome. Both figures were released earlier this week by Teikoku Databank. According to their reports, 11,333 firms with liabilities of 10 million yen or more filed for bankruptcy in fiscal 2007, with liabilities totaling 5.53 trillion yen, up 5.2% from FY2006. Transport and telecommunication industries saw a 28.2% rise in bankruptcies, while retail saw a 28.1% increase and services saw a hike of 24.3%.

Amongst reasons cited for bankruptcies were rising oil and gas prices, raw materials costs, tighter building permit approval processes, weak consumer spending, difficulty in securing loans and cuts in public spending. 3,043 firms connected to the construction industry filed for bankruptcy in FY2007, accounting for about 26.9% of the total number of firms going bust last year.

Teikoku reported that seven listed firms filed for bankruptcy in fiscal 2007, while 1,819 self-employed people did the same. The number of self-employed persons filing for bankruptcy increased by 36%. Read more

Japan bankruptcies up 6.4% in 2007

According to data released Thursday by Tokyo Shoko Research, the number of bankruptcies in Japan in 2007 rose 6.4% from the year before to hit 14,091, the highest figure registered since 2003. The combined debt of those bankruptcies grew 4.1% to reach 5.72 trillion yen, the highest level seen in seven years.

122,430 people lost their jobs as a result of bankruptcies in 2007.

The construction industry was hit hardest, with 4,018 firms going bust in 2007. Out of the ten sectors surveyed, only real estate saw a decrease in the number of bankruptcies filed last year. The manufacturing sector saw its first increase in six years, as the bite of high oil prices grew bigger fangs.

The Kanto region (which includes Tokyo and Yokohama) saw an increase for the second consecutive year, as did the Chubu regions (which includes Nagoya). The Kinki region (Osaka, Kobe, Kyoto) saw an increase in bankruptcies for the third consecutive year. Only the Tohoku and Chugoku regions saw a decrease in the number of bankruptcies. Interestingly, aside from Hiroshima in the Chugoku region, both Tohoku and Chugoku tend to be very much on the rural side. Read more

Teikoku Databank: October Corporate Bankruptcies Up 21.8% On Year

Our last post began saying it was hard to find good news about Japan’s economy. It’s not getting any easier, since it’s time to discuss Teikoku Databank’s report that Japan’s corporate bankruptcies were up 21.8% compared to last year.

This was the 13th consecutive month with a rise, and the all-time high in terms of the number of companies filing for bankruptcy, with 1,083 firms failing. Total liabilities, however, were 22% lower than a year ago, which seems to hint that more small and medium size firms are failing.

Teikoku points out that two listed firms failed in October: Osaka-based Nova, with liabilities of 43,900 million yen and Hyogo-based Quin Land, with liabilities at 20,300 million yen.

According to the report, all industries recorded increases in the number of bankruptcies over last year, with the construction (309 firms) and retail (218) reporting all-time high numbers of bankruptcies.

768 firms reporting filing for bankruptcy due to sluggish sales. This figure was up 25.3% from a year ago.

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