TOKYO, March 23 The Bank of Japan announced on
Thursday it would take extra measures to alleviate a likely
shortage of Japanese Government Bonds among brokers during the
period covering the end of the Japanese fiscal year at the end
of this month.
As a result of the BOJ's aggressive bond buying, some JGB
issues have become scarce in the market, making it hard for
brokers to borrow them in the repo market.
The conditions were likely to only get worse towards the end
of this month as investors become more reluctant to trade,
including lending JGBs in the repo market, ahead of their book
closing on March 31.
The BOJ said it would conduct a reverse repo auction on
Friday, offering to sell JGBs on March 27 with a repurchase
agreement on April 3.
The central bank added it would conduct more such operations
next week if needed.
The BOJ will also temporarily relax the rules on its JGB
lending facility, allowing market players to borrow up to 30 JGB
issues, instead of the usual 20, during March 31 and April 7, it
In addition, to deal with the shortage of short-term
government bills, the central bank said it would not buy them
for the rest of month. The BOJ usually buys discount bills once
(Reporting by Hideyuki Sano; Editing by Randy Fabi)