Five year swaps for Japanese sovereign debt widened 12 basis points to 119.5. Corporate CDS have seen similar moves, especially in Tokyo Electric CDS, which have blown out completely—up more than 600% in the past week.
The fear lies in the 200%+ debt to GDP figure, as borrowers question Japan’s ability to rebuild and effectively service their debt over the long term. Japanese officials, acknowledging this fact, have discussed levying a special one time tax on its populous, in order to raise funds.
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