JAPAN Trends and Developments Contributed by: Daniel Jarrett and Hirofumi Kaji, Atsumi & Sakai
Atsumi and Sakai Fukoku Seimei Building 2-2-2 Uchisaiwaicho Chiyoda-ku Tokyo 100-0011 Japan Tel: +81 355 012 111 Fax: +81 355 012 211 Email: info@aplaw.jp Web: www.aplawjapan.com/en
Introduction Securitisation in Japan
tised assets are categorised as debt financing instruments. Current status of securitisation Currently, securitisation is most commonly used in Japan with respect to the financing of real estate investments. The reason for this is that real estate acquisition costs have been relatively low, due to low or negative interest rates, but real estate investment has often been perceived to offer high returns. That being said, the financial environment appears to be changing. More specifically, since 2014 – and at various periods over the last decade – the yield on the ten-year Japanese government bond (JGB), a leading indicator of long-term interest rates, entered into negative territory during certain of those periods (eg, in parts of January–November 2016 and parts of January 2019–March 2020). However, the yield then approached 1% by October 2023. There - after, it again declined to 0.6% in January 2024, but then hit 1.1% in July 2024 following the Bank of Japan’s lifting of negative interest rates and removal of the yield curve control in March 2024. At the time of writing in November 2024, the yield has been generally in the 0.9% range, although it briefly exceeded 1% immediately
Securitised products in Japan are in general treated as debt financing instruments. The term “asset securitisation products” is also generally understood to refer to debt instruments, more specifically bonds, trust beneficial interests and commercial papers (Article 295, paragraph 3 of the Cabinet Office Order on Financial Instru - ments Business, etc (Order No 52 of 2007)), as well as preferred equity securities and preferred equity subscription warrants, as stipulated in the Act on the Securitisation of Assets (Act No 105 of 1998). Certain instruments are not categorised as trust beneficial interests, such as equity interests and other similar interests, and as such these instruments are generally not considered to be securitised products. Therefore, as an example, capital acquired by silent partners under a silent partnership ( tokumei kumiai ) agreement would be excluded from the scope of securitised prod - ucts, pursuant to Article 535 of the Commercial Code (Act No 48 of 1899). With the exception of the section covering real estate securitisation, this guide to securitisation in Japan is based on the premise that securi -
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