Ex-Soros Adviser Fujimaki Says Japan May Default by 2017
15 june 2012
, by Mariko Ishikawa and Yumi Ikeda (Bloomberg)http://www.bloomberg.com/news/2012-06-15/ex-soros-adviser-fujimaki-says-japan-to-probably-default-by-2017.htmlExcerpt:Investors should buy assets in U.S. dollars and other currencies of strong developed nations because Japan may default within five years, said Takeshi Fujimaki, former adviser to billionaire investor George Soros
“Japan is likely to default before Europe does, which could be in the next five years,” the president of Fujimaki Japan, an investment advising company in Tokyo, said in an interview yesterday.
Japanese should hold foreign-currency products, such as those denominated in the greenback, Swiss franc, sterling, Australian and Canadian dollars, Fujimaki said.
Should the Japanese government default, the yen may weaken to 400-500 per dollar, and the yields on benchmark 10-year bonds could surge above 80 percent, according to Fujimaki.
“I’m buying dollars in case of an emergency,” he said.
The yen rose 0.6% to 78.91 per dollar as of 6:07 a.m. in London from its close in New York yesterday.
The currency touched the postwar high of 75.35 per dollar on Oct. 31 and has averaged about 103 over the past decade.
Japan’s 10-year yields were little changed at 0.855%.
Rates on June 4 dropped to 0.79%, the lowest since June 2003.
Five-year credit-default swaps that insure Japan’s debt from nonpayment were at 90.9 basis points yesterday, up from a seven-month low of 90.1 on March 27, according to CME Group Inc.’s CMA.
The contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.
A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.