Two of the nation's biggest construction companies are learning the risks of expanding in developing markets to offset dwindling domestic demand, credit default swap prices show.
The cost of insuring the debt of Taisei Corp., the nation's third-largest general contractor, and No. 4 Kajima Corp. rose faster than contracts for any other Japanese nonfinancial company over the last month after the daily Asahi reported they might not collect $1.2 billion owed for work in Algeria.
Taisei's five-year swaps climbed to 203 basis points on Jan. 27 from 117 on Dec. 7, the day the article was published, while Kajima's jumped to 207 from 146. The Markit iTraxx Japan index added 12 basis points, or $120,000 for $10 million of the face value, to 110 in the period.