THE Mass Transit Railway Corp (MTRC) has become the first non-Japanese Asian company to gain an agreement to issue yen commercial paper following a deal with Bank of Tokyo. The agreement allows MTRC to issue up to 20 billion yen (about HK$1.46 billion) of paper dated from two weeks to nine months, according to Roger Moss, finance director. ''We have been rated A1-plus by the Japanese Bond Research Institute, their highest short-term rating,'' he said. A spokesman for the Bank of Tokyo in Hong Kong said the corporation had just pipped CITIC Beijing at the post. CITIC is expected to sign a similar deal with the Bank of Tokyo within weeks. Bank of Tokyo and Japan apparently perceive MTRC as a sovereign issuer because the Hong Kong Government owns all its equity. The yen commercial paper market was closed to foreigners until recently. Even now, foreign entities can only sign deals with the approval of the Ministry of Finance. The MTRC has been a regular borrower in yen markets and has a relationship with the Bank of Tokyo stretching back more than 10 years, but the bank had never acted as sole arranger. ''We are now ready to take to a variety of world markets at short notice,'' said Mr Moss. ''We have established strong ratings, relationships and reputations against the day when we will require very significant funding,'' he said. In mid-February, the MTRC signed a deal with a group of banks led by JP Morgan Securities to provide facilities for issuing up to US$1 billion of notes with maturities ranging from one month to 30 years and has also arranged a massive medium-term note programme. However, doubts hang over when, if ever, the MTRC will start to call down the facilities, except to roll over funding. The continuing row over the airport project and the associated railway has seen MTRC frozen in debt markets. Mr Moss said he hoped an agreement would be reached soon because there was a danger the MTRC would be perceived as ''crying wolf'' by arranging packages and never using them. One market source said: ''It is okay to arrange these things, but if you organise roadshows and lead people to believe you are going to make an issue but don't, then the markets will quickly lose patience with you. ''In the '80s, MTRC was one of the world's favourite borrowers, judged by investors and by its peers. The big borrowing programmes have stopped now.'' Mr Moss said borrowing by the MTRC would be a significant advantage for other Hong Kong borrowers and even for potential Chinese borrowers. ''Borrowings by us could only improve the perception and reception of other Hong Kong issues and by China issues,'' he said. One source said a downside was that zero visibility by the MTRC, or failing to satisfy the investor appetite that the entity had raised, would damage perceptions of local borrowers and making future attempts to borrow more expensive. With each British-Hong Kong offer on the airport programme providing China successively larger chunks of equity and smaller pieces of debt funding, there was a growing danger that banks and investors would end up disappointed, he said.