http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20001215a4.htm

Bankruptcies rise 22.7%, but liabilities up 200%

The number of corporate bankruptcies in November rose 22.7 percent from a year earlier to 1,683 for the 13th straight monthly increase, Teikoku Databank Ltd. said Thursday. Liabilities surged 199.3 percent to 1.222 trillion yen, up for the seventh straight month, the private credit-research agency added. The ratio of slump-induced failures hit a new high of 78 percent, exceeding the previous record of 77.4 percent set in October.

Teikoku Databank's monthly survey covers bankruptcies with liabilities of 10 million yen or more. The figures bring to 17,521 the number of corporate bankruptcies in the January-November period.

Teikoku Databank said the number of corporate bankruptcies is expected to increase toward the end of the year, given fierce competition among small and midsize firms. This may revive anxieties about a banking system already riddled with bad loans, the subsiding of the information technology boom and a slowdown in exports, the firm said.

The annual number of corporate bankruptcies in 2000 is sure to be the second highest on record, eclipsing the 19,171 posted in 1998, Teikoku Databank said. The postwar record high for bankruptcies is the 20,841, registered in 1984.

Liabilities left behind by companies that went under between January and November have already exceeded the previous annual record high of about 14.4 trillion yen registered in 1998.

Notable among November bankruptcies was that of audiovisual equipment maker Akai Electric Co., which was listed on the first sections of the Tokyo, Osaka and Nagoya stock markets. This brought the number of listed firms that went bust this year to 11, equaling the postwar record high of 11 registered in 1965.

A total of 1,313 companies went under in November because of the slow economic recovery, slack sales, a slump in exports, difficulties in collecting sales credits and mounting bad loans. The number of slump-related bankruptcies in November was the third-highest monthly figure after the 1,325 in October.

Contractors trim debt Japan's 73 leading contractors held more than 10.5 trillion yen in interest-bearing liabilities on a consolidated basis at the end of September, Teikoku Databank Ltd. said Thursday. That figure was a decrease of 347.4 billion yen, or 3.2 percent, from the end of March.

The companies that reduced their debts during the April-September period are either large-scale contractors with strong financial bases or those whose creditors waived claims to loans, the private credit research agency said.

But many second-tier construction companies are still restructuring and continue to be saddled with high levels of liabilities.

Kumagai Gumi Co. held the largest amount of debt as of Sept. 30, some 1.12 trillion yen. It is asking its creditors to forgive 450 billion yen in loans.

Taisei Corp. held the second largest amount at 917.2 billion yen, followed by Fujita Corp. at 870.4 billion yen.

Four other construction firms held debts of more than 500 billion yen, Teikoku said. Fifty-two companies had reduced their debts from March levels.

Hazama Corp. achieved the largest reduction, 89.3 billion yen, thanks to its creditors agreeing to forgive a total of 105 billion yen in September.

Daisue Construction Co. cut its debts by 66.6 billion yen, also as a result of debt forgiveness.

The Japan Times: Dec. 15, 2000

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-- (M@rket.trends), December 15, 2000

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Gloom in Japan as yen falls

By Bayan Rahman and Gillian Tett in Tokyo - Dec 15 2000 18:10:20

The Japanese yen fell on Friday to its lowest level against the dollar for 16 months amid growing gloom about the outlook for the world's second largest economy.

The currency fell to touch Y112.51 against the dollar - a sharp contrast to the picture at the start of the year, when it nearly broke through Y100 to the dollar.

The downbeat mood was partly triggered by news that a large credit co- operative - a form of local bank - had failed in western Japan, reigniting concern that the country remains dogged by bad loans and potential bankruptcies.

Another factor damaging sentiment was fresh signs that Japan's policymakers are becoming more nervous about the outlook. In particular, there is unease that a slowdown in the US could be damaging to Japan, since the recent upturn in Japan's corporate sector has been triggered partly by higher exports.

The Economic Planning Agency said on Friday that it believed the economy was in a severe condition but remained on track to recovery. However, Kiichi Miyazawa, finance minister, ackowledged the business mood was becoming more nervous.

A "Tankan" survey of corporate sentiment by the Bank of Japan this week showed no improvement in the confidence of large manufacturing companies between September and December - the first time that this survey had showed no improvement for two years.

More strikingly, Jiji news agency quoted Masaru Hayami, governor of the Bank of Japan, also expressing suspicions that the economic recovery was "pausing on the landing on its way up the stairs".

The Bank of Japan on Friday said it would leave overnight interest rates unchanged at 25 basis points. However, if a sharp downturn emerges in coming months, it could provoke new criticism of the bank's decision to raise interest rates from zero in August.

Jeff Young, head of economic research at Nikko Salomon Smith Barney in Tokyo, said: "The economy has at least hit local peak and the expectations for the next quarter are not terribly positive."

-- (M@rket.trends), December 16, 2000.

Thanks, Market trends, for posting this stuff. I have come to believe that trouble in Japan does not lead the US economy down - but it is still very important. The fact that the US economy seems to have been slowing rapidly in November is more cause for concern.

If you run across any articles about the current EEC trends, I'd be happy to read them, too.

-- Brian McLaughlin (brianm@ims.com), December 16, 2000.