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No. 364, January 2000

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Japanese Companies in the US


Trader NICHIMEN CORP. quietly is building up the infrastructure to participate in a variety of U.S.-based financial services businesses. Last May, the company acquired New York City's COMMODORE CAPITAL CORP., an established investment banking firm that specializes in the transportation sector. Its expertise spans such areas as leveraged leasing, project financing, realty and other private market financing functions. Now, Nichimen has purchased Commodore Capital affiliate COMMODORE SECURITIES CORP., a registered broker/dealer. A big factor behind the latest acquisition, company sources say, was the desire to gain a mechanism to securitize equipment leasing claims held by Nichimen's principal American subsidiary. Commodore Securities, which, like Commodore Capital, retained its name and personnel, also could be a vehicle for securitizing the trading company's real estate assets.

With its business booming at home thanks to the recovering stock market, NOMURA SECURITIES CO., LTD. believes that it has the financial cushion to expand its wholesale operations in the United States and Europe. Those businesses were slashed when Japan's top broker/investment banker ran up a huge loss in FY 1998. To backstop its U.S. growth plans, Nomura Securities will boost the capital of Manhattan-headquartered NOMURA HOLDING AMERICA, INC. by $550 million to nearly $1.2 billion. That company's global capital markets activities are among the areas viewed as extremely promising. Nomura Securities also plans to set up a derivatives unit in New York City. Even before management formally decided that the securities house could afford to be more aggressive in the United States, it had moved into the private equity market (see Japan-U.S. Business Report No. 362, November 1999, p. 8).

TOKIO MARINE & FIRE INSURANCE CO., LTD. joined two other investors in FINANCIAL SECURITY ASSURANCE HOLDINGS LTD. in buying approximately $113 million worth of common shares in the parent of bond insurer FINANCIAL SECURITY ASSURANCE INC. The purchase by Japan's top property and casualty insurer totaled roughly $38 million. New York City-based FSA Holdings will use the money raised to expand its core business, which is to guarantee scheduled payments of principal and interest on municipal bonds and asset-backed securities, including residential mortgage- backed securities. Since mid-1998, FSA and Tokio Marine have worked together in Japan to provide guarantees on asset-backed securities issued by domestic companies with high credit ratings.

An exchange rate of ¥103=$1.00 was used in this report. aaa

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