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Japan MOF to reduce issuance of most JGB maturities in 2017/18
December 22, 2016 / 12:26 AM / 9 months ago

Japan MOF to reduce issuance of most JGB maturities in 2017/18

TOKYO, Dec 22 (Reuters) - Japan plans to trim the issuance
of Japanese government bonds of up to 20 years to maturity
during the fiscal year starting April 1 in reaction to soft
demand for negative- or low-yielding bonds, the Ministry of
Finance said on Thursday.
    The Finance Ministry is reducing the overall JGB sales
through auction to 141.2 trillion yen ($1.20 trillion), down
from 147 trillion yen ($1.25 trillion) in the current year and
the lowest in seven years, due to reduced borrowing needs for
the next fiscal year.
    That allows the ministry to cut the issuance of most
maturities except for the longest end of the yield curve, such
as 30- and 40-year bonds.
    Investor demand for those superlong bonds is strong given
that their yields remained positive even after those on shorter
peers dropped below zero as the Bank of Japan introduced
negative rates in early 2016.
    Demand for short-term notes, such as two-year and five-year
bonds, is weak because of their negative yields. 
    The MOF plans to reduce the sales of 10-year JGBs per
auction to 2.3 trillion yen from 2.4 trillion yen at present.
That would be the first time it has reduced the 10-year bond
offer since 1999.
    The details of the MOF's JGB issuance plan for 2017 are as
follows.
    
    Maturity  Planned issue  Frequency     annual total
              per auction
              (trln yen) 
--------------------------------------------------------------  
 
    40-year    0.5  (0.5*)   bi-monthly     3.0  (2.8*)
    30-year    0.8  (0.8)     monthly       9.6   (9.6)
    20-year    1.0  (1.1)     monthly      12.0  (13.2)
    10-year    2.3  (2.4)     monthly      27.6  (28.8)
     5-year    2.2  (2.4)     monthly      26.4  (27.6)
     2-year    2.2  (2.3)     monthly      23.8  (25.0)
  Infl-linked  0.4  (0.4)    quarterly      1.6   (1.6)
  Re-offers**    --              --        10.8   (9.6)
    1-yr TBs   ***            monthly      23.8  (25.0)
---------------------------------------------------------------
    Total                                 141.2  (147.0)        
   
    
    --The numbers in brackets are the figures for the current
fiscal year to March.
    --*The issuance of 40-year bonds was increased to 500
billion yen per auction from 400 billion yen in September.
    --**The Ministry of Finance re-offers existing JGBs through
"auctions for enhanced liquidity". The MOF says it will set the
details after consultations with market players. The MOF
typically holds this type of auction twice a month now.
    --***One-year discount bills will be combined with one-year
financing bills when they are issued. The MOF plans to sell 2.3
trillion yen of one-year discount bills next fiscal year,
compared to 2.5 trillion yen in the current year.
    ($1 = 117.60 yen)

 (Reporting by Hideyuki Sano; Editing by Richard Borsuk)

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