Japanese credit spreads resilient despite poor equity market

Japanese credit default swaps remained surprisingly resilient this week, despite continued weakness in stock markets and negative corporate news, dealers said. They added that trading remained within a tight range throughout the week, brushing off, or already having factored in, negative corporate news.

Hitachi, one of the country’s largest electronics manufacturers, on Wednesday said it expected to break even in the first half of the fiscal year, ending September 30, revising its profit forecast significantly lower than an earlier profit estimate of ¥5 billion.

Credit traders in Tokyo said that despite the negative news, the cost of protection on five-year Hitachi debt remained relatively stable, at 65-70 basis points, compared with 75-80bp last week and 100bp six weeks ago. “That’s probably