BOJ Offers to Buy 150 Billion Yen in Corporate Bonds

By Mayumi Otsuma

March 4 (Bloomberg) -- The Bank of Japan offered to buy 150 billion yen ($1.5 billion) in corporate bonds from lenders as part of a program unveiled last month to channel funds to companies as the recession deepens.

The central bank plans to buy as much as 1 trillion yen in corporate bonds from financial institutions through the end of September, it said on Feb. 19. It will buy debt rated at least A and with a maturity of up to a year. The bank has also purchased commercial paper, or short-term debt, since January.

Bank of Japan Governor Masaaki Shirakawa told lawmakers yesterday that the debt purchases are an “exceptional step” to make it easier for companies to borrow.

Miyako Suda, the only member of the policy board to oppose the decision to buy corporate bonds, today said the market isn’t deteriorating enough to warrant the purchases.

Companies can raise funds by selling commercial paper market instead of bonds, Suda said in a speech in Kyoto, western Japan. She added that purchases of bonds that mature in a year or less would only have a limited effect.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net