Lehman Brothers Japan Inc. has defaulted on payment for about ¥120 billion in Japanese government securities it successfully bid for, according to informed sources.
The development Wednesday prevented the Finance Ministry from issuing the securities in question, the sources said. The securities are two-year notes auctioned Aug. 28 and financing bills auctioned Sept. 10. The payment date for both securities was Tuesday.
A default by Lehman, whose U.S. parent Lehman Brothers Holdings Inc. filed for the biggest bankruptcy in history this week, may derail growth in a market that was on track for racking up its highest sales in more than a decade.
"Many people rushed into the samurai market to get financing, but Japanese investors will realize the issuer names are risky and won't want to put money into that market," said Akira Takei, general manager for international bonds at Mizuho Asset Management Co.
Samurai bonds are yen-denominated notes sold in Japan by foreign borrowers.
The Finance Ministry is looking for ways to recover the funds from the Lehman unit, the sources said.
If it can't, the ministry will consider advance issuance of refunding bonds redeemable in fiscal 2009, the sources said.