Japan megabanks to skip third batch of U.S. investments

Japan’s three megabanks will not take part in syndicated lending for a semiconductor plant construction project selected for the third batch of Japanese investments in the United States under a bilateral tariff agreement, it was learned Thursday.

The three — MUFG Bank, Mizuho Bank and Sumitomo Mitsui Banking — are making final arrangements to forgo participation. Japanese banks face increasing difficulty securing dollar funding for loans to finance investments in the United States.

Funding for the project will be provided by the government-backed Japan Bank for International Cooperation and foreign banks.

Under the financing framework for the Japanese investments in the United States, JBIC and private-sector banks provide loans at a ratio of one to two, with the private-sector portion insured by Nippon Export and Investment Insurance.

JBIC and the three megabank lenders extended syndicated loans for three projects in the first batch of Japanese investments in the United States, including one to build a gas-fired power plant.

With the total value of Japanese investments in the United States expected to reach $550 billion, Japanese banks would struggle to raise such a large amount of dollars on their own. There are also concerns that large-scale dollar purchases by Japanese banks could further weaken the yen.

JBIC and major U.S. lenders Citigroup and JPMorgan Chase are slated to finance the construction of a gas-fired power plant in the second batch of Japanese investments. Japan’s megabank institutions have asked the Japanese government to help them secure dollar funding.

Under the third batch, Japan is set to invest up to $21 billion in a project to build new plants for U.S. chip foundry GlobalFoundries.