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ARCHIVE | Criteria | Corporates | General: Evolution Of Japan's Trading Companies Adds New Risk Dimensions Apr 02
Standard & Poors, April 2002
Abstract
Over the past decade, the raison-d'-tre of Japan's general trading companies (GTCs) has changed profoundly, and with it so has their credit quality. What were once core trading activities have since become of secondary importance to far riskier long-term lending and capital investment activities. This gradual shift in activities-from trade intermediaries to providers of long-term capital-has not been accompanied by a commensurate rise in profitability and strengthening of the GTCs' capital base. In fact, it has already entailed a sharp deterioration in the credit standing of most GTCs, whose ratings have dropped by an average of two categories since the early 1990s. In addition to the continuing transformation of GTCs into providers of long-term capital, deflationary pressures, the slow unraveling...
Companies mentioned in this report are: Mitsubishi Corp.,Mitsui & Co. Ltd.,Nissho Iwai Corp.,Sumitomo Corp.,Marubeni Corp.,ITOCHU Corp.,Kanematsu Corp.
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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