Japan Public Debt is Keeping BNP's Chief Credit Analyst Awake at Night

"With unprecedented central bank stimulus compressing debt yields, Nakazora said she likes SoftBank Corp.’s bonds, which offer investors more than five times the average spread Japanese notes pay."

BNP Paribas SA’s Tokyo head

Her colleagues describe BNP Paribas SA’s Tokyo head of investment research as a powerhouse, and she was Japan’s No. 1 bond picker from 2010 to 2012 and No. 2 for the last two years in Nikkei Veritas newspaper polls.

Making it to the top in an industry whose corporate bond sales exceeded $70 billion last year can be tough.

She also recommends the debt of Tokyo Electric Power Co., operator of the tsunami-hit Fukushima power plant, but is no longer a fan of Sony Corp. debentures because the jury’s still out on whether the electronics maker can revive its fortunes.

With a population that’s been shrinking for the past six years and annual debt servicing costs that are bigger than New Zealand’s gross domestic product, the world’s third-largest economy is quite simply running out of people who can pick up the tab.

Read more: “If Japan can’t get its finances under control, people are going to start questioning what exactly the difference between Japan and Greece is.”