“Domestic financial markets are slightly nervous given the high correlation between domestic and overseas financial markets.”As Japanese financial firms have gradually increased their holdings of Japanese government bonds (JGBs) and foreign debt, swings in U.S. Treasuries could significantly impair the value of these holdings, the BOJ said.”Particular attention should be paid to regional banks’ susceptibility to overseas market developments as they have been actively investing in long-term JGBs,” it said.But Japanese banks’ capital bases as a whole are likely to avoid significant damage even if foreign markets come under severe stress through events such as an economic downturn and a stock market plunge occurring at the same time.”Japan’s financial system is highly stable and robust in relative terms as financial firms did not aggressively take risks during the bubble period leading to the Lehman crisis,” Kenzo Yamamoto, the BOJ executive in charge of financial systems and bank examination, told reporters.”Japan’s financial system as a whole has maintained stability since the March disaster,” the BOJ said, an assessment roughly in line with a previous report issued in September last year.The BOJ typically issues the report twice a year, though it skipped doing so in March in the wake of a devastating earthquake and tsunami.

The ratings on New South Wales reflect the strong institutional framework benefiting state governments in Australia, as well as New South Wales’ strong economy, positive financial management, and excellent liquidity position. These strengths are partly offset by New South Wales’ limited budgetary flexibility due to the concentration of taxing powers at the Federal level of government, similar to all Australian states; and the need to deliver a large capital-expenditure program.The stable outlook reflects Standard & Poor’s opinion that the New South Wales government will maintain a sound financial position by balancing its focus on infrastructure investment with cost savings and potentially with asset sales. We expect further revenue and expenditure measures, as well as more capital investments and funding sources to be announced in the government’s year ending June 30, 2013 budget. We will continue to monitor the success, or otherwise, of the government’s delivery of its savings measures.”The ratings on the state are likely to come under pressure if there is weakening in the state’s budgetary performance, particularly if the state’s after-capital account deficit exceeds 10% of its operating revenues or its gross interest-burden exceeds 5% of operating revenues over two-to-three years,” said Standard & Poor’s credit analyst Anna Hughes.Downward rating pressure could also emerge if New South Wales’s net financial liabilities (net debt and unfunded superannuation) to operating revenues exceeds 120%-130%. In our view, a material increase in the state’s contingent liabilities, for example through the support of Reliance Rail Finance Pty Ltd.’s liabilities, would also create downward pressure on the rating. The Reliance Rail consortium was granted a 30-year concession to manufacture, commission, and maintain 78 commuter trains for the Sydney rail network.

* Etisalat Misr, the Egyptian arm of Abu Dhabi-based telecoms group Etisalat , has delayed a listing on Egypt’s stock exchange until market conditions improve, daily newspaper al-Mal quoted the head of Etisalat Misr as saying.* Belgian drug ingredients-to-dental device company Arseus has received a takeover approach, although it is at a very early stage, Belgium’s two main business dailies reported, without citing sources.* AEA Investors, a U.S.-based private equity group, has tabled an offer for Asco Group, the fast-growing oil and gas logistics business, the Financial Times reported.Deals of the day:

* Etisalat Misr, the Egyptian arm of Abu Dhabi-based telecoms group Etisalat , has delayed a listing on Egypt’s stock exchange until market conditions improve, daily newspaper al-Mal quoted the head of Etisalat Misr as saying.* Belgian drug ingredients-to-dental device company Arseus has received a takeover approach, although it is at a very early stage, Belgium’s two main business dailies reported, without citing sources.* AEA Investors, a U.S.-based private equity group, has tabled an offer for Asco Group, the fast-growing oil and gas logistics business, the Financial Times reported.Deals of the day: