After several weeks of spread widening on Takefuji credit protection prices have tightened nearly 30 basis points over the last week. The move follows the news that the founding family will sell part of its 58% holding. The family is being forced to sell some of its stake because Yasuo Takei, founder and former chairman of Takefuji in Tokyo, has pleaded guilty to wiretapping (DW, 12/15) if he is given a custodial sentence the company could lose its banking license under a Japanese law prohibiting prisoners from holding more than a 25% stake in a company.
"This is a huge move in Japan," said one credit head at a bulge bracket house, noting that such credit volatility is rare in the typically tight market.
In the wake of the family's announcement five-year CDS tightened to around a 65-73bps late last week from around 99bps the previous week. "Personally I believe it will further tighten as there will likely not be any type of ratings action," said a credit official at a European firm, noting that the company will likely retain its license. Takefuji is rated Baa2 by Moody's Investors Service and BBB by Standard & Poor's.
The family will establish trust funds to sell shares to third-party investors as well as shift shares to trust banks for sale, thereby ending the possibility of selling a complete controlling stake. "This took a lot of uncertainties out of the equation," said a dealer at a U.S. house, noting that with the verdict of the trial to be announced this week, time was running out.
