<<Japan suffers record level of bankruptcies
By Miki Shimogori
TOKYO, Oct 14 (Reuters) - Corporate bankruptcies climbed to record-high levels in September, figures released on Wednesday showed, further proof that Japan's corporate sector is being dealt a double blow from a weak economy and embattled banks.
Total debts held by firms that went bankrupt last month jumped to a record high of over 3 trillion yen ($25.0 billion) against the backdrop of a credit crunch that is hurting the ailing economy, a leading credit research firm said.
Tokyo Shoko Research announced that the closely watched bankruptcy debt figure jumped 320.7 percent year-on-year to 3.04 trillion yen in September, surpassing the previous record of 2.72 trillion yen marked last December.
The number of corporate bankruptcies also rose 18.8 percent year-on-year to 1,544, the highest level ever for the month of September, Tokyo Shoko said in a monthly report.
In September, Japan Leasing Corp filed the nation's biggest-ever, court-guided bankruptcy, with debts totalling 2.18 trillion yen. The nation's second-biggest leasing firm was a unit of troubled Long-Term Credit Bank of Japan.
In the April-to-September period, total bankruptcy debt rose 33.5 percent year-on-year to eight trillion yen, with the number of bankruptcies during the period up 24.8 percent year-on-year at 9,976, Tokyo Shoko said.
"It looks hopeless," said Rokuro Kuroda, a senior researcher at Tokyo Shoko. "The high level of corporate bankruptcies partly reflected worsening earnings, but I believe it is primarily a product of the severe credit crunch.
Japan's industry is facing a liquidity crunch, as banks, sadded with massive bad loans, scale back lending. That has in turn pressured corporate finances in Japan, where firms traditionally rely heavily on bank loans, while prompting major firms to switch to direct financing from the market.
However, not all companies -- especially those with speculative grade credit ratings -- can do that. Bank of Japan data unveiled on Wednesday showed that the outstanding amount of Japanese bank lendings sagged 2.7 percent in September, posting its largest ever year-on-year slippage. It was the ninth consecutive year-on-year drop.
Tokyo Shoko said economic gloom had engulfed all corporate sectors, with the number of workers affected by bankruptcies jumping 40.8 percent year-on-year to a total of 99,382 in the six-month period that started in April.
"It's a sure thing the bankruptcy numbers will be worse in the second half of every business year than those in the first half," Kuroda said. Kuroda said bankruptcies could top 20,000 cases for the full year ending next March, while total bankruptcy debt might reach 15 trillion yen, a record for the second straight year.
"There are so many firms whose share prices are already below the critical 100 yen level. You will also see the negative impact of the recent volatility in the rate," he said. "In December, you are likely to see large-scale corporate bankruptcies," he said.>> |
