Corporate Bond Purchase Program and Corporate Debt Issuance: Evidence from Japanese Corporate Bond Marketing News

Koji Takahashi and Sumiko Takaoka
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Koji Takahashi: Director, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: kouji.takahashi-2@boj.or.jp)
Sumiko Takaoka: Professor, Faculty of Business Administration, Seikei University (E-mail: takaoka@bus.seikei.ac.jp)

No 25-E-11, IMES Discussion Paper Series from Institute for Monetary and Economic Studies, Bank of Japan

Abstract: This study empirically investigates the effects of the corporate bond purchase program conducted by the Bank of Japan (BOJ) on bond issuance and issuers. By applying a large language model to market news on corporate bond issuance, we identify individual bond issues that attract demand from investors intending to resell them to the BOJ through its purchase program. Using this indicator of demand, we find that the credit spreads of such bonds are more than 20% lower than those without it, and their issuance sizes are approximately 15% larger. Additionally, the effects on corporate bonds with investor demand to utilize the BOJ program are greater than those on bonds that are merely eligible for it. Finally, we show that firms leveraging the BOJ's program to increase bond issuance allocate the raised funds to capital investment while reducing bank borrowing.

Keywords: Corporate bonds; Corporate bond purchase program; Demand uncertainty; Marketing news; Large Language Model (search for similar items in EconPapers)
JEL-codes: E43 E52 G12 (search for similar items in EconPapers)
Date: 2025-09
New Economics Papers: this item is included in nep-fmk and nep-inv
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