Some 40% of Japanese firms see fundraising impact from BOJ tweak

investing.com:

By Anton Bridge

TOKYO (Reuters) -About 40% of Japanese firms expect the central bank's recent policy adjustment to have an impact on their fundraising, a Reuters survey showed, highlighting Japan Inc's sensitivity to any changes in policy after years of massive easing.

Signs the Bank of Japan may be gearing up to exit its ultra-loose monetary regime have raised the spectre of higher borrowing costs in the world's third-largest economy, marking a potentially vast shift after decades of rock-bottom rates.

Two-thirds of firms said that they would see an impact on their fundraising if long-term interest rates touched 1%, the level the central bank now allows 10-year bond yields to hit.

«It will mean higher interest rates on our debt and lead to a deterioration in our cash flow,» one manager at an electronics firm said about the BOJ's policy tweak.

The Bank of Japan last month took steps to allow long-term interest rates to move more freely in line with increasing inflation and growth — even as it stuck to its yield curve control (YCC) targets that it uses to guide rates.

«We expect capital investments in new businesses to be impacted,» a manager at a paper and pulp company wrote.

The monthly Reuters Corporate Survey of 503 large and medium-sized non-financial Japanese firms, in which 256 responded, showed that 7% of firms expect an impact this financial year that ends in March. Another 34% see an impact on fundraising from the next financial year.

The survey was conducted for Reuters by Nikkei Research on Aug. 1-10, after the central bank's policy meeting in late July. Firms responded on condition of anonymity, allowing them to speak more freely.

One manager at a company in the services sector said higher rates would put