3/85 BONDS ISSUED ABROAD TOP $10 BILLION

Despite the fact that Japan has become the world's largest capital exporter, its corporations are rapidly increasing their procurement of funds abroad. In 1984 Japanese raised over $10 billion in bond issues overseas, up 33% over the same level a year earlier. As has been the trend for the past several years, this was more than the $8.6 billion dollars in domestic yen bond issues. Of the $10.3 billion in foreign bond issues, only $2.7 billion was in straight bond issues, with the remainder in convertible bond issues and warrant bond issues. Buoyed by the almost continuous rise in the managed Tokyo stock market for the past 20 years, foreign investors have been snapping up convertible bonds with interest rates as low as 2-3%. Thus the irony of modern international finance is that the corporations of the world's largest capital exporter raise a large proportion of the funds overseas where they receive financing from foreigners at extremely low interest rates, while Japan turns around and invests its excess funds in the bonds of foreign corporations which have to pay much higher interest rates to raise their funds. The Japanese financiers are having their cake and eating it too.

THE JAPAN LAWLETTER. March 1985. By Roderick Seeman