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UPDATE 2-Swiss National Bank eyes corporate bonds-paper

Published 02/01/2009, 07:39 AM
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ZURICH, Feb 1 (Reuters) - The Swiss National Bank is looking at investing in corporate bonds but no decision has yet been taken, the central bank's head was quoted as saying in an interview with SonntagsBlick published on Sunday.

When asked whether the SNB would invest in corporate bonds to help large companies that had used bonds for financing, SNB's chairman Jean-Pierre Roth said: "We too are looking at such measures, but so far no decisions have been reached".

In January the Bank of Japan said it would buy corporate bonds with maturities of up to one year to ease an increasingly severe funding squeeze.

Switzerland was not facing a credit crunch but the cost of getting credit through corporate bonds had risen considerably, Roth was quoted as saying in the interview.

Risk premiums in the interbank lending market had fallen, Roth was also quoted as saying, adding that the Libor rate had fallen further than he had hoped for, but he cautioned that uncertainty had resurfaced abroad in the last few weeks.

When asked about the financial health of UBS and Credit Suisse, Roth was quoted as saying that they were facing the same problems as other international banks.

"We all know that the fourth quarter was awful," he said.

Roth said the SNB, which has taken $20 billion in UBS toxic assets into a special-purpose vehicle and is committed to absorbing around $40 billion more in the spring, had neither liquidity nor financing problems as it can simply print money.

"We create the liquidity ourselves. When the economy needs it, we create it," he was quoted as saying. (Reporting by Katie Reid; Editing by Greg Mahlich)

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