Japan May Guarantee 80% Of Planned Syndicated Loan To JAL

TOKYO (Nikkei)--The government is eyeing plans to guarantee about 80%, or around 60-80 billion yen, of a roughly 100 billion yen syndicated loan for Japan Airlines Corp. now being hammered out by the state-backed Development Bank of Japan and three major private-sector banks, The Nikkei learned Thursday.

Under a special emergency program, the government can guarantee 50-80% of loans to beleaguered large corporations for funding beyond 10 billion yen, based on the firms' credit ratings. If the JAL loan comes through, this measure would be activated for the first time to assist a big company.

The DBJ and the trio of private-sector banks -- Mizuho Financial Group Inc. unit Mizuho Corporate Bank, Mitsubishi UFJ Financial Group Inc. unit Bank of Tokyo-Mitsubishi UFJ, and Sumitomo Mitsui Financial Group Inc. Sumitomo Mitsui Banking Corp. -- are working out the details of the syndicated loan, which could be extended to JAL as early as this month.

For its part, the DBJ is expected to supply its share for a year or so.

To prepare for the risk of losses should the airliner find itself in financial trouble, the DBJ has asked the government to guarantee 80% of the loan, the maximum limit. The Ministry of Finance is expected to accept this request. But the portion supplied by the private-sector banks will not receive government guarantees.

JAL is believed to have initially sought around 200 billion yen, but reduced the figure after the DBJ balked at providing such extensive financial support to the airline.

(The Nikkei June 19 morning edition)