Merrill Lynch's Japanese ABS research unit released its estimates of issuance for the 2004/2005 fiscal year ending March 31 last week. With many issuers and arrangers choosing not to disclose details of private placement offerings, making an accurate assessment of market volumes a precarious business in Japan.

However, using rating agency reports and investor circulars, Merrill says total issuance for the fiscal year reached 5.4 trillion ($50.7 billion), a 34% increase on the previous year. Most of the growth was generated by a sharp increase in MBS deals from bank issuers.

The omens for this year also look positive. Of last year's total, 2 trillion was issued between January-March 2005. In addition to private-sector MBS, the market will soon benefit from an increase in activity by the Government Housing Loan Corp. The agency will issue around 100 billion per month this fiscal year, which could push overall volumes in the market to between 6 trillion and 7 trillion.

Copyright 2005 Thomson Media Inc. All Rights Reserved.

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