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BOJ purchases blamed for distorting Japan corporate bond market

TOKYO -- Fixed-income investors in Japan are increasingly assessing bonds based on their likelihood of being bought by the central bank, rather than the creditworthiness of the issuers.

     "I would have bought it at all costs had I known that it was on sale," a fund manager at a domestic asset management institution said with frustration Friday. The fund manager learned too late from Japan Securities Dealers Association data that a Mitsui & Co. bond had been traded the previous day. The bond, with about three years to maturity, was traded with a yield of around negative 0.008% -- meaning that a buyer paid a high price and would incur a loss if the instrument was held until maturity.

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