Funds waiting to step in as Japan plans to cut guarantees on SME loans

Tokyo

JAPANESE Prime Minister Shinzo Abe's move to make it tougher for struggling companies to borrow from commercial lenders could spell opportunity for turnaround specialists.

Mr Abe's government is considering reducing guarantees of as much as 100 per cent on loans to smaller companies to cut fiscal debt and encourage banks to improve lending practices, according to the economy and trade ministry. As deposit takers avoid the risk of maintaining support for all but the largest indebted, funds such as Topaz Capital and Keystone Partners may step in.

"Banks want companies to raise funds from elsewhere to rebuild their business and then repay loans," said Tomoaki Tsutsumi, a co-chief executive officer at Keystone Partners, a Tokyo-based corporate reconstruction firm tha…