Collateral valuation prices drop across longer maturities
The Bank of Japan has lowered collateral valuation prices and adjusted repo margin ratios across multiple debt categories, effective November 27, 2026. The adjustments follow a regular review designed to maintain asset soundness while preserving collateral usability.
Steeper cuts for long-term paper
Under the amended schedule, government bonds with maturities over 20 to 30 years will be valued at 94 percent of market price, down from 95 percent, while those over 30 years decline from 94 percent to 93 percent.
Similar one percentage point reductions apply to municipal bonds, corporate debt, and foreign government bonds across identical maturity brackets.
Deeper valuation cuts target illiquid corporate credit.
Electronically recorded monetary claims on companies with residual maturities between 7 and 10 years drop to 57 percent of outstanding principal from 66 percent.
Housing loan trust collateral falls from 59 percent to 51 percent.
For repo operations, the margin ratio on purchases of 10 to 20-year government securities rises from 1.016 to 1.017.
Routine recalibration across facilities
The revisions stem from the Bank of Japan's regular assessment of collateral frameworks and repurchase agreement terms established under Policy Board decisions dating back to October 2000.
Adjustments also modify the temporary rules introduced in 2016 and 2019 covering corporate debt, municipal claims, and dollar-denominated loans on deeds.
By recalibrating valuation parameters against market conditions, the central bank aims to preserve asset soundness while maintaining market efficiency.
The entire revised framework takes effect on November 27, 2026.
Technical cleanup with defensive bite
Haircut adjustments rarely rattle markets, but steeper deductions on private debt show clear caution toward duration risk.
Institutions pledging long-dated claims must now post more collateral to obtain the same liquidity.
The move prudently protects the central bank balance sheet without shifting monetary policy.
Source: Amendment to "Prices of Eligible Collateral"
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