The Osaka prefectural government has turned to Lehman Brothers and Daiwa Bank in a novel securitisation deal, as it attempts to stimulate economic growth in the region by offering about Y30bn (Ђ238m) in loans to small and medium-sized companies.
The deal comes when local governments are becoming more self-sufficient and innovative in raising capital, as the central government - grappling with a decline in tax revenue and spiralling debt - pares down its huge subsidies to the regions.
"In the past, the local government depended on the central government and financial institutions as a means of funding small and medium-sized enterprises (SMEs)," said Takashi Endo, general manager at the Osaka government's financial division. "The new trend is for prefectures to come up with their own, new ideas for funding SMEs."
