Sumitomo Mitsui, Japan Tobacco Offerings

Darlington Musarurwa
28 May, 2009
New York City

Japan Tobacco finalized its terms of five year bonds sales that are rated AA. Sumitomo Mitsui Financial plans to raise as much as $8.6 billion after it made a disastrous investment in Barclays. April retail sales decline in Japan marked the eighth monthly fall in a row.

[R]7:00 PM Tokyo, 6:00 AM New York – Japan Tobacco finalized its terms of five year bonds sales that are rated AA. Sumitomo Mitsui Financial plans to raise as much as $8.6 billion after it made a disastrous investment in Barclays. April retail sales decline in Japan marked the eighth monthly fall in a row.[/R]

Stocks in Tokyo were looking for direction in bond and currency markets. The rising yields in U.S. bonds markets, a gain in crude oil prices and fall in price of yen contributed to the market volatility.

The Nikkei 225 Index in Tokyo closed higher 12.62 or 0.13% to 9,451.39. Yen closed lower to 96.58 against one dollar.

Crude oil increased and traded above $62 a barrel after Saudi minister said that oil price will increase to $75 by the end of the year. The U.S. Energy Agency also suggested that oil may reach $110 by 2015 on sustained demand from India and China.

April Retail Sales Decline

April retail sales in Japan were reported to be anemic as consumers’ worry of job losses and global economic decline. Retail sales in the month fell 2.9% from a year ago and March sales were lowered to 3.8%. Sales declined since September of last year.

Sales at large scale retail stores which are 15% of retail sales declined 6.7%, a thirteen monthly decline in a row.

Wholesale sales declined 27.8% in the month and commercial sales fell 22.4% from a year ago month.

Sumitomo Mitsui to Raise Capital

Sumitomo Mitsui Financial said that it plans to sell 219.7 million shares and raise as much as 840 billion yen or $8.6 billion. The battered financial institution made a disastrous investment in Barclays forcing it to record a loss of 53.2 billion loss in the recently completed year.

The company plans to offer 102.2 billion shares to domestic investors and 117.5 million to international investors.

The offering is underwritten by Daiwa Securities and Goldman Sachs.

Gainers & Losers

Sumitomo Mitsui declined 1.3% to 3,720 after it prepared to raise capital from domestic and institutional investors.

After the release of April retail sales Isetan Mitsokoshi Holdings Ltd declined 2% to 837 yen, UNY Company Ltd fell 3.4% to 751 yen and Fast Retailing dropped 1.4% to 10,970 yen.

Japan Tobacco Inc declined 6.7% to 267,200 yen after it finalized the terms of 100 billion yen bonds maturing in 2014. The bond will pay 1.128% interest rate. The offering is managed by Nomura Securities, Daiwa Securities SMBC Co and Mizuho Securities Co.

The bonds have been rated AA by the Rating and Investment Information, Inc.

Nikkei 200 Average Movers

Japan Tobacco Inc led the decliners in the Nikkei 225 index of 6.8% followed by losses in Credit Saison Co., Ltd of 3.7%, in Sompo Japan Insurance Inc of 3.7%, in UNY Co Ltd of 3.3% and in Sapporo Holdings Ltd of 3.3%.

Taiyo Yuden Co., Ltd. led gainers in the Nikkei 225 index with a rise of 10.3% followed by gains in Sumitomo Osaka Cement Co Ltd. of 8.4%, in Clarion Co Ltd of 6.6% and Sumitomo Metal Mining Co Ltd. of 6.1%.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 12.62 or 0.13% to 9,451.39, ASX 200 index in Australia decreased 45.40 or 1.19% closed to 3,755.70. The KL Composite index in Malaysia lower 6.44 or 0.61% closed to 1,041.24.The Markets of Hong Kong and China were closed today.

The Kospi Index in South Korea increased 30.15 or 2.21% to close at 1,392.17.SET index in Thailand closed higher 0.02 or 0.00% to 555.43 and JSE Index in Indonesia increased 10.03 or 0.53% closed to 1,902.88. The Sensex index in India increased 186.37 or 1.32% closed to 14,296.01.