Merger reduces default risk of Japan's shipping companies

Tokyo

THE president of Japan's biggest carrier said on Monday that it was the sight of container businesses worldwide joining forces or collapsing that encouraged him to team up with his nearest local rivals.

Default risk on the debt of Japan's top three carriers fell as investors cheered their bid to avoid the fate of failed South Korean operator Hanjin Shipping Co. The planned merger between the container arms of Nippon Yusen KK, Mitsui OSK Lines Ltd and Kawasaki Kisen Kaisha Ltd would create a company controlling 7 per cent of the world's box-shipping trade. The companies expect that the move will result in synergy savings of about 110 billion yen (S$1.46 billion) a year.