BOJ Mulls Ending Support for Corporate Financing

Tokyo, Oct. 7 (Jiji Press)--The Bank of Japan is considering
terminating its support for major companies in the country to raise funds at
the end of this year as scheduled, due to improvement in those firms'
financial conditions.

The central bank has been purchasing bank-held commercial paper and
corporate bonds since this spring in a bid to prevent funding difficulties
at large companies.
But now that improvement in financial conditions at major Japanese
firms was confirmed by its September "tankan" quarterly business survey,
released last week, the BOJ is rethinking about the necessity of those
extraordinary assistance measures, informed sources said.
The bank's Policy Board is expected to start full-fledged
discussions on whether to continue the measures at its two-day meeting from
Tuesday and make a final decision on the matter at the following meeting on
Oct. 30.
The BOJ may also decide to end special open market operations to
supply low-cost funds for commercial financial institutions' lending to
companies, the sources said.
But the sources also said the BOJ could put off concluding the
discussions, depending on future developments in domestic and overseas
financial markets.
At a press conference after a Group of Seven meeting in Istanbul
last weekend, BOJ Governor Masaaki Shirakawa favored the idea of ending
those emergency steps designed to help Japanese companies cope with the
global financial crisis.
Offers to sell CP and bonds have fallen short of the BOJ-envisaged
amount at each operation, he pointed out.
The special fund supply operations also have become less active. On
Tuesday, the BOJ supplied 515.2 billion yen to the banking system, only
one-third the peak level of 1,445.3 billion yen on April 10.
Meanwhile, the BOJ will continue guiding the unsecured overnight
call rate target to around 0.1 pct at least for the time being, the sources
said, adding medium- and small-sized companies are still having difficulty
raising funds.