TOKYO: Japanese government bonds gained on Wednesday, sending the 5-year yield to a 16-month low, as fears about the progress of Greece's credit bailout and slowing global growth added to the safe-haven appeal of fixed-income assets.
The 5-year yield skidded one basis point to 0.285 percent, though the yield is seen unlikely to fall much further as some investors sell ahead of the finance ministry's auction of 2.5 trillion yen ($30.97 billion) of 5-year notes on Thursday.
"The auction will be safe as usual lately, probably with a 3 percent coupon," said a portfolio manager at a Japanese asset management firm.
"But for now, JGBs are tracking risk-off," he added.
Investors await a decision by Greece's private creditors, who have until Thursday night to decide to participate in a bond swap Greece needs to do in order to secure bailout funds to avoid a chaotic default on March 20. Some Greek pension funds and foreign investors rejected the offer.
Euro zone data released on Tuesday raised the possibility that the region might face a recession.
Ten-year JGB futures added 0.14 point to 142.78, while the yield on the latest 10-year JGB slipped half a basis point to 0.980 percent.
Longer durations also gained, pulling their yields further away from milestones touched in the previous session.
The 30-year yield lost half a basis point to 1.955 percent after closing at a three-month high of 1.960 percent on Tuesday.
The yield on the 20-year note fell half a basis point to 1.755 percent, after rising to 1.770 percent on Tuesday, its highest level in nearly six weeks.
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