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BOJ will buy BBB rated corporate bonds

…woops, the frontrunners of the Feds QE2 bought the wrong stuff! Uh oh, that’s not good.

The Bank of Japan plans to buy corporate debt with lower credit ratings than it previously purchased and moved up the date of the next policy meeting, seeking to accelerate stimulus as the economy slows.

The BOJ will buy BBB rated corporate bonds and a-2 commercial paper, it said in a statement today in Tokyo. Board members will meet again on Nov. 4-5 to discuss purchases of exchange-traded funds and real-estate investment trusts, bringing forward the meeting by more than a week.

Governor Masaaki Shirakawa’s decision to change the meeting date to after the Federal Reserve’s Nov. 2-3 gathering signals he wants scope to react to any Fed easing, said economist Hideo Kumano. New York Fed President William Dudley set expectations of about $500 billion in bond purchases by the U.S. central bank, a step that may spur the yen and pose risks to Japan’s growth.


The bank maintained the benchmark overnight call rate between zero percent and 0.1 percent, as forecast by economists surveyed by Bloomberg News. It also kept the amounts of its 5 trillion-yen asset buying fund and 30 trillion-yen credit program unchanged.

The fund will purchase 1.5 trillion yen of government debt, 450 billion yen in ETFs and 50 billion yen of REITs, the bank said. ETFs and REITs will be purchased at market price.


With money-market rates already low, the central bank is turning to purchases of riskier assets to reduce their premiums and push down borrowing costs.

BOJ policy makers pledged on Oct. 5 to maintain its “virtually zero rate policy” until price stability comes in sight.

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