The revised issuance will address concerns about the supply-demand balance for super-long JGBs after the BOJ ended eight years of negative interest rates in March
Japan’s finance ministry is considering reducing the issuance of additional super-long government bonds in a liquidity enhancement auction, two sources with knowledge of the matter told Reuters on Friday (Jun 21).
The amount of supply would be reduced by 100 billion yen (S$853.5 million) to 400 billion yen in a liquidity auction scheduled for August for Japanese government bonds (JGBs) with remaining maturities of 15.5 to 39 years, according to the sources.
The most recent liquidity enhancement auction in June provided 500 billion yen in such JGBs.
However, the ministry plans to boost issuance of existing JGBs with remaining maturities of five to 15.5 years by 50 billion each in August and September, said the sources, who declined to be identified as the matter is still private.
Therefore, the overall annual issuance would not change as a result of the plans.
The revised issuance will address concerns about the supply-demand balance for super-long JGBs after the Bank of Japan ended eight years of negative interest rates in March.
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The ministry will formalise the plan after consultations with primary dealers on Monday.
Liquidity enhancement auctions are designed to increase turnover in less traded parts of the government bond market, such as those bonds issued some time back.
Some issues are held nearly 90 per cent by the BOJ.
Of the 171 trillion yen of JGB issuance planned for the year through March 2025, 13.2 trillion yen would be provided through such auctions. REUTERS
