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(For immediate release)
October 27, 1999
Bank of Japan
The Monetary Policy Meeting of the Policy Board has today decided to establish "eligibility standards for asset-backed securities" as attached.
This decision was made in line with "Basic Policy on the Eligibility as Collateral of Asset-Backed Securities and Debt Obligations Issued by Financial Institutions that Maintain Current Accounts with BOJ" as decided at the Monetary Policy Meeting of the Policy Board on September 21, 1999.
Eligibility standards for asset-backed securities (hereinafter defined as securities whose principal and interest are mainly paid out of receivables from specific assets) as collateral for the Bank's credit shall be as follows:
Receivables from specific assets (which constitute original sources for paying principal and interest of asset-backed securities) should be deemed sufficient to pay the principal and interest of asset-backed securities, in light of the creditworthiness of specific assets and any supplementary means to enhance their creditworthiness.
The structure of asset-backed securities should be deemed sufficient to satisfy the requirements described below, etc.
Asset-backed securities should be publicly issued in Japan.
Notwithstanding 1. (1) above, asset-backed securities whose creditworthiness is enhanced by financial institutions maintaining current accounts with the Bank shall not be eligible. However, asset-backed securities whose principal and interest would be deemed certain to be paid even without credit enhancement shall remain eligible.
These standards shall become effective October 27, 1999.