With domestic long-term interest rates rising into the 3% range for the first time in roughly 30 years, Japanese companies are increasingly shifting their financial strategies toward fixed-rate and longer-term borrowing. There are also emerging indications that shrinking fiscal headroom is beginning to weigh on sentiment.
Long-term interest rates in Japan's domestic bond market have moved into the 3% range for the first time since 1996, or roughly 30 years. This has brought renewed recognition of rising interest costs. A broad range of entities, including companies and households, are being forced to address the “cost of money.”
Japanese companies have been shifting their financial strategies with the end of the long period of low interest rates in view. Changes in borrowing structures that had been considered effective while the low-rate environment continued appear to be affecting companies' day-to-day operations as interest rates rise.
The trend toward financial strategy changes at individual companies is examined through the example of comments by the CFO of Resonac Holdings. Fixed-rate and longer-term borrowing is said to be gaining weight among the funding options available as interest rates rise.