Factbox: BOJ unveils asset purchase program details

TOKYO (BestGrowthStock) – The Bank of Japan announced details of its asset buying program, which has become the new benchmark of monetary easing as it struggles to keep the strong yen from aggravating deflation and hurting the fragile economy.

Following are details announced on Thursday:

— Under the 5 trillion-yen ($61.21 billion) asset buying scheme, the BOJ will buy long-term Japanese government bonds (JGBs) worth up to around 1.5 trillion yen and short-term government securities of up to about 2 trillion yen.

— The BOJ will buy assets in several stages, starting with those for which the necessary preparations have been completed. It will keep buying until the total asset balance reaches 5 trillion yen by the end of 2011.

— It hopes to start buying government bonds in November, and commercial paper and corporate bonds in December. It also pushed forward its next rate review by 10 days to November 4-5, so that it can start buying by mid-December exchange-traded funds (ETFs) and Japan Real Estate Investment Trusts (J-REITs).

— JGBs subject to purchase are those issued on or before the date of auction with remaining maturities of one to two years.

— Purchases will be made via conventional auctions, or multiple-price competitive auctions, in which counterparties’ bid spreads above the minimum yields of 0.1 percent per year.

— It will buy up to 0.5 trillion yen each of corporate bonds and commercial paper. It will buy up to 0.45 trillion yen in ETFs and 0.05 trillion yen in J-REITs.

— Corporate bonds rated BBB or higher and corporate bonds issued by real estate investment corporations with a minimum rating of AA will be eligible for BOJ purchases.

— Commercial paper rated a-2 or higher and asset-backed commercial paper rated a-1 will be eligible for BOJ purchases.

— A single issuer’s CP and corporate bonds to be purchased by the BOJ shall not exceed 100 billion yen each.

— The BOJ will buy ETFs and J-REITs at market prices.

— The BOJ will buy ETFs and J-REITs so that the maximum purchase amounts will be reached by the end of 2011.

— The BOJ may set a purchase limit for each ETF to diversify portfolios.

— For each J-REIT issued, the BOJ’s purchase amount will not exceed 5 percent of the total amount.

For more details, follow the link to the BOJ’s statement: http://www.boj.or.jp/en/type/release/adhoc10/k101028.pdf

(Reporting by Leika Kihara, Tetsushi Kajimoto, Rie Ishiguro; Editing by Edmund Klamann and Joseph Radford)

Factbox: BOJ unveils asset purchase program details