March 23, 2017 / 9:34 AM / 4 months ago

BOJ unveils special measures to alleviate JGB shortage at end-March

2 Min Read

TOKYO, March 23 (Reuters) - 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 said.

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 every week. (Reporting by Hideyuki Sano; Editing by Randy Fabi)

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