Japanese Firms Sell Assets to Offset Rising Borrowing Costs

Japanese nonfinancial companies are evaluating asset sales and the divestment of strategic shareholdings to counter the highest borrowing costs in a generation. A Bloomberg survey of 30 firms indicates that rising yen-denominated debt costs are actively influencing investment decisions across multiple sectors.

Toyota Motor Corp and Tohoku Electric Power Co both expect annual interest expenses to increase by more than 30% upon refinancing. To stabilize financing, companies like JERA are utilizing interest-rate swaps and increasing overseas borrowing, while others are bringing forward their funding plans.

While overall corporate profits remain strong and AI investments continue, capital expenditure is showing signs of restraint in the electricity, gas, and metal products sectors. The Chugoku Electric Power Company, Inc. stated that higher rates could accelerate the sale of assets, and KDDI identified asset sales as a potential step to reduce debt. Additionally, Daiwa House Industry Co warned that shifting interest rates may impact real estate prices and necessitate a review of investment hurdle rates.