BOJ Injects 3 Trillion Yen to Boost Economy

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
15 Jun, 2010
New York City

The Bank of Japan has decided to offer as much as 3 trillion yen as loans to companies through banks in an effort to boost the economy. The loans will be for four years and applications from banks will be accepted through March 2012 at the benchmark interest rate, it said in a statement today.

[R]5:00 PM Tokyo, Japan – Stocks in Japan climbed for the fourth consecutive day led by upgraded brokers and automakers. Bank of Japan decides to offer 3 trillion yen as loans to companies to boost economy. Japan decides to cull swine and cattle to restrict the spread of foot-and-mouth disease from Miyazaki prefecture.[/R]

Stocks in Japan climbed for the fourth straight day after rating upgrades of automakers and brokerage firms countered the effect of Greece’s downgrading by four notches to junk yesterday.

The Nikkei 225 Index in Tokyo closed higher 8.04 or 0.08% to 9,887.89 and of the stocks in Nikkei 225 Stock Average, 104 increased, 100 declined and 21 was unchanged.

The euro fell from its one-week high against the yen after the Greek downgrade.

The nation’s five-year notes also gained after the downgrade, as demand for the relative safety of Japan’s debt increased.

The Bank of Japan, in its second such operation since last month, will be offering dollar loans to lenders to help ease credit concerns. The loans are for 84 days at an interest rate of 1.23% against eligible collateral and will be available from June 17 to September 9, according to an announcement today in Tokyo.

The Bank of Japan has also decided to offer as much as 3 trillion yen as loans to companies to be disbursed through banks in an effort to boost the economy. The loans will be for four years and applications from banks will be accepted through March 2012 at the benchmark interest rate, it said in a statement released today in Tokyo.

The financing unit of Toyota Motor Corp sold $2 billion of 5 and 10-year notes of U.S. debt, it first such offering after four years to keep its source of funding as diverse as possible.

Toyota Motor Credit Corp issued on June 14 $1.25 billion of five-year notes with a spread of 120 basis points and $750 million of 10-year debt with a spread of 130 basis points, even after the World’s largest automaker recalled more than 8 million vehicles worldwide to fix acceleration problems.

Corn imports by Japan is likely to drop this year as the government is culling 2.1% of the nation’s swine population and 1.5% of its cattle to prevent the spread of foot-and-mouth disease beyond the Miyazaki prefecture in southern Japan.

The cull will cut demand for corn feed which is imported by Japan mostly from the U.S. The first case of the disease was found on a cattle farm in Tsuno, a town in the eastern part of Miyazaki, on April 20.

Strike at the parts factory in Guangdong province of southern China for Honda Motor Co, was withdrawn by workers after setting a deadline of June 18 for reaching a wage settlement.

“The company will listen to worker’s demand again and then give an answer on June 18,” said Hirotoshi Sato, a spokesman for Honda Lock in Miyazaki, Japan.

A Yokohama court rejected yesterday the petition by Fujitsu Ltd’s former President Kuniaki Nozoe to be reinstated as a director at the company, citing that he had stepped down voluntarily and was not asked to leave.

“Fujitsu views the court’s decision as a validation of the company’s assertions,”, the Tokyo-based company said in a statement today.

Nikkei Movers

Mizuho Securities Co., Ltd led gainers in the Nikkei 225 Stock Average with a rise of 4.0% followed by Nitto Boseki Co Ltd 3.2%, Nissan Motor Co., Ltd 3.2% and Resona Holdings, Inc 2.8% and All Nippon Airways Ltd 2.8%.

Daiichi Sankyo Company Ltd led the decliners in the Nikkei 225 Stock Average with a loss of 2.3% followed by Shinsei Bank, Limited 2.1%, Sekisui House, Ltd 1.9%, IHI Corporation 1.8% and Mizuho Financial Group, Inc 1.8%.

Other Movers

All Nippon Airways Co., Ltd increased 2.8% to 290.00 yen after the carrier was upgraded to “overweight” from “equal-weight” at Morgan Stanley.

Canon Inc, the maker of cameras, fell 1.0% to 3,735.00 yen.

Fanuc Ltd fell 0.7% to 10,540.00 yen.

Honda Motor Co., Ltd rose 0.2% to 2,717.00 yen after the automaker said workers at Honda Lock were largely back on the job on June 15, temporarily ending a six-day strike as negotiators tried to reach a new agreement on wages.

Konica Minolta Holdings Inc fell 0.8% to 959.00 yen after the provider of advanced imaging and networking technologies for the desktop, today announced winners of the 2009 Konica Minolta dealer awards.

Nissan Motor Co., Ltd rose 3.2% to 668.00 yen after the automaker was upgraded to “outperform” from “neutral” at Macquarie Group Ltd.

Nintendo Co., Ltd climbed 3.1% to 25,290.00 yen.

Nomura Holdings, Inc fell 1.8% to 541.00 yen after the company said it is in early stages of discussions to join private equity firm MBK Partners in a possible joint bid for Lone Star Funds'' 51% stake in Korea Exchange Bank, a person familiar with the matter said Tuesday.