TOKYO (MNI) – Japanese firms saw issuing conditions for their
commercial paper were unchanged from three months ago as the Bank of
Japan continues monetary easing, a followup poll to the BOJ’s March
Tankan released on Wednesday showed.

The diffusion index (“easy” minus “severe”) showing current CP
issuing conditions among major firms that have issued short-term debt at
least once in the past two years, stood at 30, unchanged from the
previous survey.

The index level of 32 marked in March 2010 was the highest since
March 2008, when the BOJ began polling firms to get a clearer view of CP
issuance conditions.

The index has recovered sharply from a record low of -55 posted in
December 2008, when market functions were paralyzed by the global
financial crisis following the failure of Lehman Brothers.

Companies in general are still cautious about making capital
investment, lowering the need to seek short-term funding in the CP
market.

The percentage of respondents saying CP issuance was “easy” stood
at 32% of the 163 firms surveyed in March, compared with 31% of 162
firms polled in December.

The percentage of those saying conditions were “not so severe” fell
to 66% from 68%.

The percentage of firms reporting “severe” conditions stood at 2%,
up from 1% in the previous survey.

The Tankan survey showed that the diffusion index for CP issuance
— the percentage of all firms polled (regardless of whether they had
issued short-term debt) saying the environment for issuing CP is easy
minus the percentage of those saying it is difficult — stood at +1 in
March, unchanged from the previous Tankan.

The March Tankan showed that the ratio of liquidity — assets
(cash, deposits and securities) divided by sales — at major firms fell
to 1.13 at the end of December (the latest period available) from 1.14
at the end of September.

The ratio of liquidity above 1.00 is considered to be relatively
high.

The ratio of liquidity at smaller firms at end-December stood at
2.10, up from 2.09 from three months earlier.

tokyo@marketnews.com
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