Bank of Japan to buy 1 trillion yen in Corporate Bonds to Spur Lending
London, Thursday, February 19, 2009 ARANCA News Report (www.aranca.com) : Bank of Japan (BoJ) announced plans to buy upto 1 trillion yen ($10.7bn) of corporate bonds for the first time, as it attempts to spur lending and ease credit flow to cash-strapped corporates. The central bank also extended its asset-purchase program. The world’s second largest economy is experiencing its worst downturn in 35 years.
The BoJ said it will start purchasing A-rated and higher corporate bond, outright from financial institutions to encourage banks to lend more to businesses. The central bank will continue to buy corporate bonds until the end of September. The bank also announced plans to extend it programme to buy 3 trillion yen in commercial paper and provide unlimited collateral-backed loans to financial institutions till December.
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