As a result profits are expected to fall at many Japanese financial institutions, including major banks.

However, there is not widespread interest in the new issue among Japanese institutions.

Among the first foreign investors to return, brokers say, are Japanese institutions.

Ten other banks, including six Japanese institutions, will provide capital for the fund.

"Right now we have 19 internationally active Japanese financial institutions," he said.

Some Japanese financial institutions have recently been forced to turn for help to the country's biggest banks.

By contrast, many large Japanese institutions have been sitting on the sidelines.

Investors, particularly Japanese institutions, simply see more and better investment opportunities in other countries.

Obviously, not all Japanese institutions would simply stop buying bonds if the proposal became law.

Japanese financial institutions are again expected to take up perhaps a third of the refunding issues.