Morgan Stanley to Sell Japanese Bonds

Morgan Stanley (NYSE:MS), owner of the world’s largest retail brokerage, is expected to raise close to $5 billion by selling Uridashi bonds to Japanese investors.

Morgan Stanley can sell bonds anytime between Oct 12 this year and Oct 11, 2013, as per a shelf registration filed with the Japanese Finance Ministry on October 4th. Uridashi bonds are primarily sold to Japanese retail investors which are only the debt issued outside of Japan. This may happen anytime in the next two years.

Morgan Stanley, sold Uridashi bonds in Japan twice in the last three months, raising a total of 46.5 billion yen in August and 51.5 billion yen in September on behalf of the 200 billion yen program announced in April. Natuso Nishio, a spokesman from Tokyo, denied commenting on the dates for any further sales.

The New York based firm is relying on Japanese individuals for funds at the time when the company’s stock prices are falling and the price for insuring its bonds is increasing over concerns that the European debt crisis will have an effect on the international banking system. Mitsubishi UFJ Financial Group Inc. was prompted by the volatility in the market which led to the biggest shareholder to issue a statement saying that the company is firmly committed to their agreement.

In October 2008, $9 billion was invested by Mitsubishi UFJ on Morgan Stanley as the finance institution’s share prices collapsed after Lehman Brothers Holdings Inc. was left bankrupt. The banks came to conclusion in April to convert $7.8 billion of Morgan Stanley’s preferred shares into common stock and finished the process of conversion in June 2011, thereby making Mitsubishi as Morgan Stanley’s largest common shareholder having currently a 22.4 percent stake.

Morgan Stanley’s shares have fallen by more than 54.1 percent this year. Morgan Stanley usually depends on debt markets for backing because it has low deposits. Less than 10 percent of the bank’s funding was received from depositors until June 30. In comparison, JPMorgan & Co. received more than half of its funds from retail deposits.

Mitsubishi UFJ on Oct 3^rd 2011 supported Morgan Stanley, as the cost to protect the firm’s debt reached highest levels since the fall of Lehman Brothers Holdings Inc. Contracts on the U.S. based retail brokerage, increased by 92 basis points to a midprice of around 580 basis points in New York on Monday, the highest since October-08 according to CMA, the London based data provider.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.