TOKYO, Mar 14: Benchmark Japanese government bond prices held steady on Thursday even as superlong maturities skidded after some investors shunned the relatively low coupon at this fiscal year’s final 20-year sale.
‘The auction wasn’t that good,’ said Maki Shimizu, senior strategist at Citigroup.
The Ministry of Finance offered 1.2 trillion yen of newly issued 20-year bonds with a coupon of 1.6 percent, the lowest since August. The bonds sold at a lowest price of 99.40, with bids of 3.11 times the amount offered. That was up from the previous sale’s bid-to-cover ratio of 2.56 times, but the tail between the average and lowest accepted prices widened to 0.24 from 0.11 at last month’s offering.
While pension funds and lifer insurers continue to seek superlong bonds ahead of the close of Japan’s fiscal year at the end of the month, banks and short-term players were apparently sellers in the afternoon, market participants said.
‘The superlong tenor is performing differently from the longterm sector, the demand/supply balance is so hard to read,’ Citigroup’s Shimizu said. ‘It can move a few basis points in a day.’
The 20-year yield rose 1.5 basis points to 1.585 percent, pulling further away from last week’s low of 1.450 percent, which was its lowest since June 2003.
The 30-year bond yield rose 3.5 basis points to 1.770 percent, moving away from last week’s 2-1/2 year low of 1.625 percent.
Fixed-income assets lost some of their safe-haven luster after bullish U.S. Retail sales data on Wednesday helped push the Dow Jones industrial average to its ninth straight session of all-time highs, marking the index’s longest consecutive winning streak since November 1996.
But expectations of more Bank of Japan asset purchases ensured that interest in local debt didn’t melt away.
The 10-year yield was flat at 0.625 percent, also holding above its near-decade low of 0.585 percent hit last week.
Ten-year JGB futures rose 0.06 point to 145.17. Futures hit a record high of 145.50 on Friday.
JGB investors expect the BOJ to take aggressive easing steps under Haruhiko Kuroda, whose nomination is expected to be approved by Japan’s upper house of parliament on Friday, and these could include stepped-up buying of long-dated bonds. Kuroda’s nomination was approved by the lower house earlier on Thursday.
(AGENCIES)
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