UPDATE 2-Brazil central bank outlines private sector bond-buying details

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By Jamie McGeever

BRASILIA, June 23 (Reuters) – Brazil’s central bank on Tuesday outlined details of its plans to buy private-sector bonds on the secondary market, a program aimed at tackling market dysfunction and lack of liquidity, as well as improving general financing conditions in the economy.

Assets with a credit rating equivalent to “BB-“ or higher, which are non-convertible into shares and have a maturity of at least 12 months, will be eligible for purchase, the central bank said in a statement on its website.

Preference will be given to assets issued by micro, small and medium-sized companies, the central bank said. This is a sector that has particular difficulty in accessing credit since the economic crisis erupted a few months ago.

“It is a measure aimed at providing liquidity and better functioning of the secondary market for private sector assets, with potential benefits for financing productive activity in general,” the statement said.

“The central bank will act to maintain the normal functioning of the market,” it said.

This measure is contained in the “War Budget” constitutional amendment from last month authorizing emergency steps to combat the fallout from the COVID-19 outbreak, part of which includes the central bank buying private and public sector bonds.

The central bank said it will provide daily updates on its website regarding any purchases, including details of the beneficiaries and amounts settled. (Reporting by Jamie McGeever; editing by Jonathan Oatis and Sandra Maler)

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