Japan’s Ministry of Finance may place Calyon Securities, a unit of France’s biggest bank, in a list of 26 dealers that bid for government bonds under a plan to ensure demand, according to Bloomberg.
Japan, which has the most debts than any other country in the world, started selling bonds through a network of so-called primary dealers in October after it did not manage to get enough bids for an auction in 2002. Bids for benchmark bonds reached a record sum of104 trillion yen ($99 billion) compared with1.6 trillion yen of bonds at an auction on Sept. 2.
Calyon, an investment-banking unit of Credit Agricole SA, aims at becoming a primary dealer to have customers in Japan said, Yuji Ban, a bond trader. The company is increasingly purchasing debt sales in order to fulfill requirements of the finance ministry, Ban added.
According to the figures of Ministry of Finance, Calyon does not belong to the leading 10 buyers at Japanese government debt auctions. It was ranked as the ninth-largest buyer of French state debt in 2004, according to France’s debt management agency. Nevertheless the company’s goal is to turn into a primary dealer.
Primary dealers such as Nomura Securities Co., Japan’s largest broker, and the Japanese branch of Merrill Lynch & Co., the world’s biggest securities company by capital, are obliged to purchase an average 1 percent of bonds and 0.5 percent of bills auctioned for six months in order to confirm its status of a primary dealer.
As a feedback, firms are enabled to buy extra securities on auctions’ closure at the same price as during the sale. They have also right to negotiate borrowing plans with the ministry.
The Ministry of Finance in Tokyo completes its list of primary dealers at the beginning of each quarter. The release of the latest list is planned for April. Though the ministry hasn’t set a specific date.
Takahiro Tsuji, the representative of the Market Finance Division in the MOF’s Finance Bureau, which decides upon who qualifies, refused to provide any names of firms entering the system to comment on which firms would enter the system.