July 26, 2016 2:00 am JST

Japan to give banks low-interest dollar funding for infrastructure loans

TOKYO -- Japan's government will make low-interest dollar funding available to domestic banks to support lending for overseas infrastructure projects involving Japanese companies.

The 200 billion yen ($1.88 billion) program, part of an upcoming economic stimulus budget, will be administered by policy lender Japan Bank for International Cooperation and paid for by government-backed dollar bonds.

With demand for the world's reserve currency brisk, Japanese banks' dollar borrowing costs are running about double that of their European peers. JBIC is expected to raise dollars through its bond sale at an interest rate premium about 0.2 percentage point lower than private-sector Japanese lenders can do. It could also tap into surplus dollar funds to provide additional lending support.

The types of infrastructure that could qualify for funding include electric power, natural resources and renewable energy. The idea is to help trading houses, plant builders and other Japanese bidders offer the most favorable terms.

Legislation enacted in May enables JBIC to dispense such aid, but the bank has yet to do so.

The stimulus package, plans for which are supposed to come together in early August, is also expected to include several hundred billion yen in additional capital for the Japan International Cooperation Agency, Nippon Export and Investment Insurance and other government-backed financial institutions, for the purpose of promoting infrastructure exports.

(Nikkei)

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.