Prepared by Mark Griffiths and Toshihide Endo (both APD).
These numbers exclude debt instruments such as bills of exchange and commercial paper, and are calculated using an end-1997 exchange rate of B 47=$1. Almost half of the foreign debt was held by Japanese creditors, just under 20 percent by U.S., and 5-10 percent each by the U.K., France, and Germany.
These figures exclude credit extended by closed finance companies, thus exaggerating somewhat the extent of the debt reduction.
However, this classification should not be taken too literally as it is based on the identity of the borrower, which may be different from the sector in which the project was financed.
The unwillingness of banks to accept principal reductions raises concerns that restructured debts will need to be renegotiated; if banks retain the right to renegotiate if the company’s position improves, this will reduce the incentive of the company to earn profits.