Amendment to Principal Terms and Conditions for the Outright Purchases of Asset-Backed Securities

January 20, 2004
Bank of Japan

At the Monetary Policy Meeting held today, the Bank of Japan decided to amend the principal terms and conditions for the outright purchases of asset backed securities (see Attachment for the amended text).

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Attachment

Amendment to "Principal Terms and Conditions for the Outright
Purchases of Asset-Backed Securities"

• Paragraph 4. shall be amended as follows.

4. Eligible Securities to be Purchased

(No change)

1. (1) (No change)
2. (2) ABSs

1. (a) (No change)
2. (b) Ratio of assets related to small and medium-sized enterprises
   50% or more of either the total value or the total number of individual assets in 'specific assets' (i.e. pools of financial assets which constitute original sources for paying principal and interest of ABSs) shall be composed of assets related to small and medium-sized enterprises (i.e. enterprises either with capital of less than 1 billion yen or with employees of 999 or less). 'Assets related to small and medium-sized enterprises' mean (i) financial assets such as receivables whose original creditors are small and medium-sized enterprises and (ii) financial assets such as loans whose debtors are small and medium-sized enterprises.
3. (削除) (C) Creditworthiness of debtors of specific assets (削除ここまで)
   (削除) If specific assets include loans whose original creditors are financial institutions, debtors of the loans shall be those classified as"normal" based on the FSA's examination manual through banks' self-assessment of loan portfolios at the time when the loans were transferred to issuers of ABSs. (削除ここまで)
   table

(3) STSs

1. (a) (No change)
2. (b) Ratio of assets related to small and medium-sized enterprises
   50% or more of either the total value or the total number of individual assets in reference portfolios shall be composed of assets related to small and medium-sized enterprises.
3. (削除) (c) Creditworthiness of debtors of reference portfolios (削除ここまで)
   (削除) If reference portfolios include loans whose creditors are financial institutions, debtors of the loans shall be those classified as"normal" based on the FSA's examination manual through banks' self-assessment of loan portfolios at the time when the credit risk of loans was transferred to issuers of STSs. (削除ここまで)
   table

(4) ABCP

1. (a) (No change)
2. (b) Ratio of assets related to small and medium-sized enterprises
   50% or more of either the total value or the total number of individual assets in specific assets shall be composed of assets related to small and medium-sized enterprises.
3. (削除) (c) Creditworthiness of debtors of specific assets (削除ここまで)
   (削除) If specific assets include loans whose original creditors are financial institutions, debtors of the loans shall be those classified as"normal" based on the FSA's examination manual through banks' self-assessment of loan portfolios at the time when the loans were transferred to issuers of ABCP. (削除ここまで)
4. (c(削除) d (削除ここまで)) Ratings
   ABCP shall be rated a-1 by at least (削除) two (削除ここまで) one eligible rating agency(削除) ies (削除ここまで).
   table

(Supplementary Provision)

These amendments shall become effective on January 20, 2004.