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(Reference)Acceptance of Dematerialized CP Issued by Foreign Corporations with Guarantees as Eligible Collateral and as Eligible Assets for CP Purchase Operations

March 16, 2005
Bank of Japan

1. Outline

The Bank of Japan decided to accept yen-denominated dematerialized commercial paper (CP) issued by foreign corporations with domestic corporation guarantees as eligible collateral for the Bank's provision of credit and as eligible assets for CP purchase operations, given that more market participants are likely to shift from using paper CP to using dematerialized CP.

  • The following table describes the Bank's previous arrangements for CP as eligible collateral and as eligible assets for CP purchase operations.
  • table

2. Eligibility Standards and Collateral Prices

  • Eligibility standards and collateral prices of dematerialized CP issued by foreign corporations with guarantees shall be as follows (basically the same as those of dematerialized CP issued by domestic corporations).
    (Eligibility Standards)
    1. (i) Creditworthiness
      That deemed appropriate in light of relevant conditions including the creditworthiness of a guarantor.
    2. (ii) Term That with an original maturity of up to 1 year.
    (Collateral Prices)
    Set at 95% of face value.
  • Dematerialized CP issued by foreign corporations with guarantees shall be accepted as eligible assets for CP purchase operations (the same as dematerialized CP issued by domestic corporations).

3. Schedule

  • This decision shall become effective on March 16, 2005.

4. Assessment of Creditworthiness of Dematerialized CP Issued by Domestic Corporations

  • The Bank will start assessing the creditworthiness of a guarantor in accepting dematerialized CP issued by domestic corporations as eligible collateral and eligible assets for CP purchase operations (the same as for the assessment of paper CP) from March 16, 2005.