Only US$2.2 billion has landed so far, and dollar costs are scaring off Tokyo's lenders
JPMorgan and other US banks are close to agreeing to help finance projects under Japan's US$550bn investment pledge to the United States.
The step would ease the dollar-funding strain that has kept Japanese lenders on the sidelines, two people familiar with the talks told Reuters.
The financing would help Tokyo make good on commitments to US president Donald Trump.
Japanese banks have hesitated to take part because their deposit base sits in yen, and raising large sums of US dollars for long-dated infrastructure work carries steep costs, the sources said.
So far, Japan has committed only US$2.2bn in financing, all of it tied to the first batch of projects unveiled in February, Reuters reported.
That is a fraction of the two announced batches, which together run to more than US$100bn, and a sliver of the headline pledge.
State-backed Japan Bank for International Cooperation is providing roughly one-third of the US$2.2bn, with the country's three megabanks covering the rest: Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group.
The money flows to special-purpose companies set up to run each project.
The three lenders have told the government that securing long-term dollar funding is expensive and crowds out lending elsewhere, even with state loan guarantees, separate sources said.
To obtain dollars, the banks would typically issue dollar bonds, borrow in wholesale markets or turn to the swap market, each carrying a cost, Reuters reported.
The wide gap between US and Japanese interest rates, together with hedging expenses, can push those costs higher.
Prime Minister Sanae Takaichi's government has been weighing ways to help domestic banks source dollars for the US projects.
One idea under consideration would tap dollars held in Japan's foreign exchange reserves, Kyodo news agency has reported.
Washington has handed Takaichi's government a list of candidate projects for the scheme, according to one of the people and two other sources, who spoke on condition of anonymity.
Reuters said it could not determine how much the US banks might supply, for which projects, or whether the US government was party to the talks over which lenders would step in.
JPMorgan did not respond to a request for comment.
Japan's Ministry of Economy, Trade and Industry said in a statement to the outlet that no decisions had been made on US bank participation and that any such decision rested with the banks.
The ministry added it had not shortlisted a third batch of projects and that bilateral talks were continuing, noting that ideas can be floated and rejected as a general rule.
The US Department of Commerce did not immediately respond to a request for comment outside business hours.
The first batch, from February, covers an oil export facility in Texas, an industrial diamond plant in Georgia and a natural gas-fired power plant in Ohio, according to Reuters.
A second batch, announced in March, includes small modular nuclear reactors from GE Vernova Hitachi in Tennessee and Alabama, plus gas-fired plants in Pennsylvania and Texas.
Japan agreed to the pledge in July 2025 to secure a US tariff rate of 15 percent, down from the 25 percent Trump had threatened on most Japanese exports.
Commerce secretary Howard Lutnick and Japan's then top trade negotiator Ryosei Akazawa signed a memorandum of understanding on Sept 4, 2025, setting out that cash flows from the projects are split evenly until Japan recoups its investment plus interest, after which 90 percent goes to the US and 10 percent to Japan.
Under the framework, Japan must commit the full amount before Trump's term ends in January 2029.
Tokyo is keen to show momentum on the pledge, the sources said.
In January, Trump vowed to raise tariffs on South Korean imports over what he called a failure to honour its trade deal, before walking the threat back, according to Reuters.
Even with large US banks involved, meaningful risks remain because infrastructure projects can take decades to turn a profit and repay their debt.
