Japan's Distressed Debt Market:
Sizable risk capital from outside may be necessary to accelerate Japan''s corporate restructuring to replace the stock of impaired bank loans. To attract risk capital, impaired loans must find market-clearing prices. However, the asymmetry in the bid-ask prices faced by banks and distresse...
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Format: | Elektronisch E-Book |
Sprache: | English |
Veröffentlicht: |
Washington, D.C
International Monetary Fund
2004
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Schriftenreihe: | IMF Working Papers
Working Paper No. 04/86 |
Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 Volltext |
Zusammenfassung: | Sizable risk capital from outside may be necessary to accelerate Japan''s corporate restructuring to replace the stock of impaired bank loans. To attract risk capital, impaired loans must find market-clearing prices. However, the asymmetry in the bid-ask prices faced by banks and distressed-debt investors continues to stall efforts to create a liquid distressed-debt market. This paper asserts that the wedge between the prices faced by different participants is primarily a result of different valuation methods employed by banks and distressed-debt investors. On the one hand, banks do not recognize ""maturity default"" that results in banks rolling over impaired-loan accounts, effectively turning them into perpetual debt, which is expected to capture any upside potential for value. On the other hand, distressed-debt investors presently view their investments as equity stakes that require improved cash flows, unlike the buy-and-sell distressed-collateral market that existed in the mid-1990s. We suggest that bids from distressed-debt investors may not be as low as they are deemed by local banks and the asymmetry in prices may be reduced if banks value their claims as corporate equity |
Beschreibung: | 1 Online-Ressource (29 p) |
ISBN: | 1451850913 9781451850918 |
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illustrated | Not Illustrated |
index_date | 2024-07-03T20:13:25Z |
indexdate | 2024-07-10T09:35:33Z |
institution | BVB |
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publisher | International Monetary Fund |
record_format | marc |
series2 | IMF Working Papers |
spelling | Ohashi, Kazunari Verfasser aut Japan's Distressed Debt Market Ohashi, Kazunari Washington, D.C International Monetary Fund 2004 1 Online-Ressource (29 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 04/86 Sizable risk capital from outside may be necessary to accelerate Japan''s corporate restructuring to replace the stock of impaired bank loans. To attract risk capital, impaired loans must find market-clearing prices. However, the asymmetry in the bid-ask prices faced by banks and distressed-debt investors continues to stall efforts to create a liquid distressed-debt market. This paper asserts that the wedge between the prices faced by different participants is primarily a result of different valuation methods employed by banks and distressed-debt investors. On the one hand, banks do not recognize ""maturity default"" that results in banks rolling over impaired-loan accounts, effectively turning them into perpetual debt, which is expected to capture any upside potential for value. On the other hand, distressed-debt investors presently view their investments as equity stakes that require improved cash flows, unlike the buy-and-sell distressed-collateral market that existed in the mid-1990s. We suggest that bids from distressed-debt investors may not be as low as they are deemed by local banks and the asymmetry in prices may be reduced if banks value their claims as corporate equity Online-Ausg Singh, Manmohan Sonstige oth http://elibrary.imf.org/view/IMF001/04033-9781451850918/04033-9781451850918/04033-9781451850918.xml Verlag URL des Erstveröffentlichers Volltext |
spellingShingle | Ohashi, Kazunari Japan's Distressed Debt Market |
title | Japan's Distressed Debt Market |
title_auth | Japan's Distressed Debt Market |
title_exact_search | Japan's Distressed Debt Market |
title_exact_search_txtP | Japan's Distressed Debt Market |
title_full | Japan's Distressed Debt Market Ohashi, Kazunari |
title_fullStr | Japan's Distressed Debt Market Ohashi, Kazunari |
title_full_unstemmed | Japan's Distressed Debt Market Ohashi, Kazunari |
title_short | Japan's Distressed Debt Market |
title_sort | japan s distressed debt market |
url | http://elibrary.imf.org/view/IMF001/04033-9781451850918/04033-9781451850918/04033-9781451850918.xml |
work_keys_str_mv | AT ohashikazunari japansdistresseddebtmarket AT singhmanmohan japansdistresseddebtmarket |