The Ministry of Finance is offering 2.5 trillion yen of five-year notes, reopening issue number 107 with a coupon of 0.2 percent, matching the coupon of the past eight sales.

"We believe the auction is also likely to go smoothly or even produce strong results. However, we believe participants should keep in mind the risk that yields could rise to the lower-0.2 percent level depending on the results of next week's MPM (monetary policy meeting)," Noriatsu Tanji, a fixed income strategist at Barclays in Tokyo, said in a note to clients.

Sources close to the central bank said it would consider expanding stimulus again and double its inflation target to 2 percent at its Jan. 21- 22 meeting.

The 5-year JGB yield was flat at 0.160 percent, after it fell as low as 0.150 percent on Friday, its lowest since Dec. 6.

"The 5-year note's moves on Friday took some investors by surprise, and some believe it was overdone, although with the BOJ supporting the short end, there is little risk in holding 5-years," said a fixed-income fund manager at Japanese asset management firm in Tokyo.

The 10-year JGB yield fell 1 basis point to 0.755 percent, its lowest since Dec. 21, moving further away from a 4-1/2-month high of 0.840 percent touched several times last week.

The benchmark 10-year JGB futures contract ended morning trade up 0.12 point at its session high of 144.26.

The superlong sector outperformed, with the yield on the 20-year bond down 2 basis points to 1.740 percent and that on the 30-year yield down 2.5 basis points to 1.975 percent.

"There is less fear about additional issuance now," the fund manager said.

The finance ministry will issue an additional 300 billion yen a month in government debt next month and in March, to fund stimulus spending, which is a smaller increase than the 700-800 billion yen some market participants had estimated.