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Temporary Rules regarding the Eligibility Standards for Debt of Companies and Municipal Governments

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June 20, 2019

1. Purpose

With a view to facilitating monetary operations, the Bank shall apply, for the time being, the temporary rules to the eligibility standards for and collateral prices of debt of companies and municipal governments, in addition to the "Guidelines on Eligible Collateral" (Policy Board Decision on October 13, 2000) and the "Guidelines on Credit Ratings of Companies" (Policy Board Decision on October 13, 2000).

2. Categories of Eligible Collateral

The categories of eligible collateral shall be as set forth in the Table.

3. Eligibility Standards for Each Category of Collateral

Eligibility standards concerning creditworthiness and marketability of each category of collateral stipulated in 2. shall be as set forth in the Table, except when the collateral satisfies the standards stipulated in the Table of the "Guidelines on Eligible Collateral." However, the Bank may make exceptions where it considers it inappropriate to accept items as collateral.

4. Collateral Prices

Collateral prices for the categories of collateral stipulated in 2. shall be calculated according to 3.(2) and (3) of the "Guidelines on Eligible Collateral," except when the collateral satisfies the standards stipulated in the Table of the "Guidelines on Eligible Collateral."

5. Special Provisions regarding Bills Drawn by Companies, Self-Assessed Electronically Recorded Monetary Claims, and Self-Assessed Loans on Deeds

(1) Maximum Amount of Collateral

For each counterparty, the total amount of bills drawn by companies, self-assessed electronically recorded monetary claims (eligible electronically recorded monetary claims on companies satisfying (1), (2)(a) and (3) of the corresponding column in the Table and eligible electronically recorded monetary claims on entities owned by municipal governments (entities that are wholly-owned by municipal governments, hereinafter the same), hereinafter the same), and self-assessed loans on deeds (eligible loans on deeds to companies satisfying (1)(a) and (2) of the corresponding column in the Table and eligible loans on deeds to entities owned by municipal governments, hereinafter the same) submitted to the Bank pursuant to the eligibility standards stipulated in 3. shall not exceed the amount calculated by multiplying the total amount of collateral submitted to the Bank, and the percentage set pursuant to the relevant rules of the Bank.

(2) Evaluation of Creditworthiness

The Bank shall not apply 4.(3) of the "Guidelines on Eligible Collateral" in evaluating the creditworthiness of debtors of bills drawn by companies, self-assessed electronically recorded monetary claims, and self-assessed loans on deeds pursuant to the eligibility standards stipulated in 3.

Supplementary Provision

These temporary rules shall become effective on the date determined by the Governor.

Table : Eligibility Standards for Each Category of Collateral

Table: Eligibility Standards for Each Category of Collateral
Collateral Category Eligibility Standard
Corporate Bonds Publicly-offered straight bonds rated BBB or higher by an eligible rating agency (including those issued by a company rated BBB or higher, those fully guaranteed by a company rated BBB or higher, and those guaranteed by a company whose non-guaranteed bonds issued are rated BBB or higher) which are deemed eligible in light of creditworthiness and other relevant factors.
Bills Drawn by Companies Bills satisfying the following requirements:
  1. (1) Bills drawn by debtors that are assessed as having strong results and no particular problems with its financial position in the latest self-assessment by the financial institution submitting the collateral.
  2. (2) Bills with an original maturity of up to 1 year.
Electronically Recorded Monetary Claims on Companies Electronically recorded monetary claims satisfying the following requirements:
  1. (1) Electronically recorded monetary claims for which electronic records are made by eligible recording institutions.
  2. (2) Electronically recorded monetary claims on debtors satisfying either of the following requirements:
    1. (a) Debtors that are assessed as having strong results and no particular problems with its financial position in the latest self-assessment by the financial institution submitting the collateral.
    2. (b) Debtors that are rated BBB or higher by an eligible rating agency (including cases where non-guaranteed bonds issued by the debtor are rated BBB or higher) and are deemed eligible in light of creditworthiness and other relevant factors.
  3. (3) Electronically recorded monetary claims with a residual maturity of up to 10 years (including those with a maturity date falling in the same month of the tenth year).
Loans on Deeds to Companies Loans on deeds satisfying the following requirements:
  1. (1) Loans on deeds to debtors satisfying either of the following requirements:
    1. (a) Debtors that are assessed as having strong results and no particular problems with its financial position in the latest self-assessment by the financial institution submitting the collateral.
    2. (b) Debtors that are rated BBB or higher by an eligible rating agency (including cases where non-guaranteed bonds issued by the debtor are rated BBB or higher) and are deemed eligible in light of creditworthiness and other relevant factors.
  2. (2) Loans on deeds with a residual maturity of up to 10 years (including those with a maturity date falling in the same month of the tenth year).
Municipal Bonds All municipal bonds are eligible.
Electronically Recorded Monetary Claims on Municipal Governments Electronically recorded monetary claims satisfying the following requirements:
  1. (1) Electronically recorded monetary claims for which electronic records are made by eligible recording institutions.
  2. (2) Electronically recorded monetary claims with a residual maturity of up to 10 years (including those with a maturity date falling in the same month of the tenth year).
Loans on Deeds to Municipal Governments Loans on deeds with a residual maturity of up to 10 years (including those with a maturity date falling in the same month of the tenth year).
Electronically Recorded Monetary Claims on Entities Owned by Municipal Governments Electronically recorded monetary claims satisfying the following requirements:
  1. (1) Electronically recorded monetary claims for which electronic records are made by eligible recording institutions.
  2. (2) Electronically recorded monetary claims on debtors that are assessed as having strong results and no particular problems with its financial position in the latest self-assessment by the financial institution submitting the collateral.
  3. (3) Electronically recorded monetary claims with a residual maturity of up to 10 years (including those with a maturity date falling in the same month of the tenth year).
Loans on Deeds to Entities Owned by Municipal Governments Loans on deeds satisfying the following requirements:
  1. (1) Loans on deeds to debtors that are assessed as having strong results and no particular problems with its financial position in the latest self-assessment by the financial institution submitting the collateral.
  2. (2) Loans on deeds with a residual maturity of up to 10 years (including those with a maturity date falling in the same month of the tenth year).