Feb. 19 (Bloomberg) -- The Bank of Japan said it will buy 1 trillion yen ($10.7 billion) in corporate bonds from financial institutions and extend lending programs to prevent a shortage of credit from deepening the recession.
Governor Masaaki Shirakawa and his colleagues said the bank will buy bonds rated A or higher from March 4 to Sept. 30, the central bank said in a statement in Tokyo today. The board kept the overnight lending rate at 0.1 percent in a unanimous vote.
The recession is making it difficult for companies to raise finance by selling debt or shares, and banks are struggling to meet an increase in demand for loans. The cost to protect Japanese corporate debt against default soared to a record this week on concern bankruptcies will increase after the economy shrank last quarter by the most since the 1974 oil shock. more...
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