TOKYO- About 40 percent of Japanese firms expect the central bank’s recent policy adjustment to have an impact on their fundraising, a Reuters survey showed, highlighting Japan Inc’s sensitivity to any changes in policy after years of massive easing.
Signs the Bank of Japan may be gearing up to exit its ultra-loose monetary regime have raised the specter of higher borrowing costs in the world’s third-largest economy, marking a potentially vast shift after decades of rock-bottom rates.
Two-thirds of firms said that they would see an impact on their fundraising if long-term interest rates touched 1 percent , the level the central bank now allows 10-year bond yields to hit.
“It will mean higher interest rates on our debt and lead to a deterioration in our cash flow,” one manager at an electronics firm said about the BOJ’s policy tweak.
The Bank of Japan last month took steps to allow long-term interest rates to move more freely in line with increasing inflation and growth – even as it stuck to its yield curve control (YCC) targets that it uses to guide rates.
“We expect capital investments in new businesses to be impacted,” a manager at a paper and pulp company wrote.
The monthly Reuters Corporate Survey of 503 large and medium-sized non-financial Japanese firms, in which 256 responded, showed that 7 percent of firms expect an impact this financial year that ends in March. Another 34 percent see an impact on fundraising from the next financial year.
The survey was conducted for Reuters by Nikkei Research on Aug. 1-10, after the central bank’s policy meeting in late July. Firms responded on condition of anonymity, allowing them to speak more freely.
