Japanese megabanks face US funding squeeze

Hong Kong

JAPANESE megabanks are emerging as the biggest victims of a worsening squeeze in the US$1 trillion commercial paper market, as high swap costs leave them with few satisfactory alternatives for US dollar funding.

Investors have pulled billions out of prime money-market funds ahead of new Securities and Exchange Commission (SEC) regulations aimed at preventing a repeat of the liquidity crisis following the collapse of Lehman Brothers in 2008.