Japan Takes Debt on the Road; Tokyo Hopes Foreign Investors Will Help Fund Widening Deficit
Tokyo -- FOREIGN INVESTORS helped Japan crawl out of a long economic slump by pouring money into its stock markets and mopping up troubled assets. Now Tokyo is hoping foreigners will help fend off a national debt crisis long in the making.</br></br>For the first time, the Japanese government is holding a roadshow to pitch its debt to investors from the U.S. and Europe. As its budget deficit continues to blossom, Tokyo is scrambling to line up new types of investors who can play a part in absorbing the record amount of government bonds that will hit the market during the next several years.</br></br>The task will be even more urgent if the nation's two-year-old economic recovery, now faltering, finds its feet again. That would spur the current big buyers of Japanese government bonds, such as domestic banks and the postal savings system to slash their purchases in favor of higher-yielding investments such as stocks. An end to the country's "monetary easing" policy would mean the Bank of Japan, too, would reduce its purchases of JGBs, as the government bonds are called.</br></br>The problem is that foreign investors have little appetite for what's on offer. Because of Japan's super-easy monetary policy, yields on JGBs are the lowest among debt issued by the Group of Seven wealthy nations, as are the grades Tokyo's bonds get from credit-rating agencies.</br></br>"We are very negative on JGBs right now, and we have been for some time," says Charles Dolan, senior portfolio manager for global bonds at Mellon Asset Management. From Los Angeles, he manages $3.5 billion for pension funds and central banks around the world.