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Business

Takata defaults on $270m in debt

What investors recover to hinge on recall costs, split with automakers

| Japan

TOKYO -- With its filing for bankruptcy protection Monday, air bag supplier Takata fell into default on 30 billion yen ($268 million) in domestic corporate bonds.

The debt consists of three issuances of 10 million yen. The old Elpida Memory defaulted on its publicly offered bonds in February 2012.

Foreign hedge funds and affluent individuals are believed to hold the debt. How much they get back will vary greatly, with many in the market expecting 10-30%, depending on such factors as the size of recall expenses and how they are shared by Takata and automakers.

Meanwhile, investors continue the hunt for alternatives on the Tokyo Stock Exchange. Ashimori Industry soared as far as 19% at one point Monday, a day when its turnover septupled to 8.1 billion yen. Fellow air bag maker Nihon Plast rose as far as 3%.

"Speculative buying by individuals is popularizing these shares, and the money could flee as quickly," said Nobuyuki Fujimoto of SBI Securities.

(Nikkei)

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