As JAL Bankruptcy Nears, Investors Rethink 'Too Big to Fail'

Japan Airlines Corp.'s expected bankruptcy filing could wipe out shareholders, cause the value of its bonds to plummet, and alter global investor attitudes toward Japan.

Until now, shareholders had believed that Japan had a governmental safety net and would prop up ailing companies indefinitely. Blue-chip companies such as JAL were thought to be "too big to fail."

"If investors can no longer assume some form of government safety net when investing in Japan, then we have to assume that this would ultimately be reflected in significantly wider corporate spreads than have been the norm to date," said BNP Paribas chief credit analyst Mana Nakazora.

Read Full Article from Wall Street Journal

- Posted: 2010-01-18 11:28:17

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