“Japan plans to issue 4.2 trillion yen ($37 billion) of 40-year government bonds in the new fiscal year, a 17% increase that comes even as the government plans to cut its bond issuance overall,” said Reuters, quoting anonymous sources, during early Thursday morning in Asia.
It marks a third straight year of increases in issuance of the 40-year bonds, which are closely watched by the market, and reflects solid demand from life insurers at the long end of the yield curve, said the sources.
Prime Minister Fumio Kishida's inaugural debt issuance plan will see overall calendar-based sales of Japanese Government Bonds (JGBs) at around 200 trillion yen, or down about 20 trillion yen from this year, the sources said, reflecting the new premier's push to keep a lid on debt.
The increase in the 40-year bonds would mean sales of around 700 billion yen at auctions every other month, from auctions of 600 billion yen now, the sources said.
The government will keep issuance steady of five-year, 20-year, 30-year and inflation-linked 10-year bonds, the sources said.
The government also plans to boost liquidity-enhancing auctions by 600 billion yen in the next fiscal year, the sources said. In liquidity enhancing auctions, the Ministry of Finance issues additional amounts of existing JGBs to improve liquidity.
The news favored USD/JPY prices to pick up from intraday low to 114.13. However, bulls await Tokyo open amid recent challenges to the previous risk-on mood, raised by the White House.
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