TOKYO: Japanese government bonds (JGBs) fell on Thursday as the finance ministry carried out its first super-long debt auction under a reduced-issuance scheme introduced in response to record-high yields.
Prices of the benchmark JGB declined, sending its yield up 2 basis points (bps) to 1.445%.
The 20-year yield rose 2 bps to 2.345%.
The 30-year JGB gained 1.5 bps to 2.9%. Yields move inversely to bond prices.
The market for JGBs, particularly long-dated bonds, has faced challenges of late amid the Bank of Japan’s (BOJ) tapering of bond purchases, softer demand from life insurers and concerns over the nation’s fiscal health.
A 20-year JGB auction in May saw the weakest demand since 1987 and the subsequent sales of 30- and 40-year securities saw subdued uptake in the market.
Yields on the super-long debt surged to record levels, prompting the government to curtail the issuance of the securities. The Ministry of Finance sold about 700 billion yen ($4.9 billion) of 30-year JGBs on Thursday, down from about 800 billion yen at the previous auction.
The auction’s bid-to-cover ratio, a measure of demand, was 3.58 versus 2.92 in June.
The tail, another measure of demand, was 0.31 yen versus 0.49 yen previously.
Benchmark JGB futures held declines after the sale.
Comments
Comments are closed for this article.