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Top Analyst Says BOJ's Negative Corporate Yield Adds Distortions

  • May put pressure on Japanese banks to cut lending rates: BNP
  • Coupon floor for company bonds may fall below 0.1%: SMBC Nikko

The Bank of Japan’s purchase of corporate debt at negative yields for the first time adds to distortions in Japan’s bond markets and raises risks for investors and banks, according to Mana Nakazora, the chief credit analyst in Tokyo at BNP Paribas SA.

The central bank bought corporate bonds in market operations at minus 0.03 percent on Wednesday, according to data from the central bank. While the BOJ has purchased company notes at zero interest in the past, it’s the first time for it to buy the debt at negative levels, according to data compiled by Bloomberg.