Bubble-era defaulter Haseko ends 20-year market absence

TOKYO: Haseko Corp, a Tokyo-based condominium builder, is returning to the bond market for the first time since defaulting in 1999 on about US$3.6bil in debt after the Japanese real estate bubble burst.

Haseko, which paid dividends for the first time in six years in the year ended March 31, last month registered to sell as much as 30 billion yen (US$274mil) of notes and plans an offering of five-year debt, according to documents from Japan’s Finance Ministry and Mizuho Securities Co, one of the arrangers.

This would be Haseko’s first sale since it raised 40 billion yen in 1994, Bloomberg- compiled data show.

Prime Minister Shinzo Abe’s economic revival policies spurred a property market boom that pushed the average cost of an apartment in the greater Tokyo area to a 22year high in August at about 57 million yen, or the equivalent of US$524,000, according to Japan’s Real Estate Economic Institute Co.

“The fact that a company like Haseko can return is a sign of the bond market expanding its scope to a new level,” said Kenji Serizawa, a credit analyst at Daiwa Securities Co, Japan’s second-largest brokerage. “You have investors flush with money from the central bank’s easing and few new bond offerings – this is a great environment for selling debt.”

Real Estate Economic Institute Co forecasts apartment sales in Tokyo will reach as many as 48,000 units in 2014, the second-highest level since the collapse of Lehman Brothers Holdings Inc in 2008. Last year’s total was higher, as buyers piled in ahead of the consumption tax increase in April 2014.

Haseko’s three-year business plan released in May pronounced the end of a 20-year restructuring which saw the company receive 390 billion yen in bond forgiveness and a 150 billion yen debt-for-equity swap. Its shares traded at 819 yen in Tokyo yesterday, up from a record low of 13 yen in 1999.

“During the bubble era, Haseko wasn’t just building condominiums, they were also in the office space market and had various investments,” said Masahiro Mochizuki, a Tokyobased equities analyst at Credit Suisse Group AG.

“These days, they’ve narrowed their focus to just apartments and get a steady flow of orders, some 40% of which is from the nation’s top developers.” — Bloomberg