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BOJ Move Seen Spurring Company Debt Demand

As the Japanese central bank moves to cap sovereign bond yields, investors will seek higher-yielding corporate bonds.

By Finbarr Flynn, Bloomberg | Updated on September 23, 2016

The Bank of Japan’s decision to explicitly control sovereign bond yields will probably cap interest rates, bolstering demand for corporate debt offering extra premiums, according to analysts.

The BOJ added what it calls “ yield curve control” to its stimulus mix on Wednesday and said it will seek to keep the yield on the 10-year government bond “around zero.” The average yield on Japanese corporate bonds ended that day at 0.24%, according to Nomura BPI indexes, compared with minus 0.035% for the nation’s 10-year debt.

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