Latest news with #primarydealers
Bloomberg
an hour ago
- Business
- Bloomberg
Japan Set to Cut Super-Long Bond Issuance by More Than Expected
Japan is planning to cut the issuance of super-long bonds this year by more than earlier reported, after record levels of volatility in super-long yields in recent months stoked market concerns. The Finance Ministry proposed reducing the issuance of 20-, 30- and 40-year bonds by a total of ¥3.2 trillion ($22 billion) through the end of March 2026, according to a plan presented by the ministry during a meeting with primary dealers on Friday.
Yahoo
7 hours ago
- Business
- Yahoo
Japan to Sound Out Market Players on Tweaks to Bond Issuance
(Bloomberg) -- Japan's Finance Ministry will seek feedback from market players later Friday over its planned reductions to super-long bond issuance as it takes steps to quell market turbulence. Security Concerns Hit Some of the World's 'Most Livable Cities' JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown One Architect's Quest to Save Mumbai's Heritage From Disappearing The ministry will hold a meeting with primary dealers at 4 p.m. in Tokyo to discuss recent market developments and its issuance plans. A draft of its revised bond plan seen by Bloomberg showed that authorities will propose cutting issuance of 20-, 30- and 40-year bonds by ¥100 billion ($690 million) each per auction through March 2026. To offset the reduction in sales of longer maturities, the ministry is looking to increase issuance of 2-year and shorter-dated debt, the plan showed. The meeting will be closely monitored by traders as they look to confirm those figures and gain further clarity over the ministry's plans following recent yield spikes in Japan that have rippled across global markets. 'Since April, we've seen a significant rise in yields on super-long bonds, compared to other maturities,' Finance Minister Katsunobu Kato told reporters on Friday. 'I expect we'll hear some views on this fiscal year's issuance plan as well,' he said, referring to the primary dealers' meeting. Market participants estimate that a reduction of roughly ¥300 billion in the combined issuance of super- long-term bonds per auction from a current average of ¥2.3 trillion is needed to ensure a better match of supply and demand. That's a reduction in line with the plan seen by Bloomberg. Any cuts of a smaller magnitude could spook investors and trigger a selloff, raising the risk of another sharp rise in yields. 'If the issuances of 20-, 30- and 40-year bonds are cut by ¥100 billion each, along with similar reductions for the liquidity enhancement auctions, it's likely to avoid triggering disappointment-driven selling,' said Naoya Hasegawa, chief bond strategist at Okasan Securities. 'Given recent heavy trading in super-long bonds, there's even some expectation that the 30-year issuance could be cut by as much as ¥200 billion,' he added. Japanese government bond yields dropped on Thursday afternoon in Tokyo, with intermediate notes outperforming after a 5-year government bond sale drew strong demand. The market had already largely priced in the scale of the reductions, said Kazuhiko Sano, chief bond strategist at Tokai Tokyo Securities, in a report on Friday. The imbalance in supply and demand has been triggered largely by the Bank of Japan's decision to step back from the market after dominating purchases in recent years. Since last summer the BOJ has slashed its buying after more than a decade of quantitative easing left it holding more than half of Japan's outstanding central government debt. But the reduced buying from the central bank has not been matched by increased purchases from private-sector banks and life insurers. That gap has fueled much of the choppy downward pressure on bond prices and pushed up yields. Finance Minister Katsunobu Kato reiterated in a Bloomberg interview last week that mid-year revisions to the bond issuance plan are possible, signaling to markets that adjustments might be underway. The planned move by the ministry should limit the increase in supply of super-long bonds and follows a decision earlier this week by the BOJ to slow down its withdrawal from the market from next April, a move that will support demand down the line. The BOJ now pledges to slow quarterly reductions of its bond purchases to ¥200 billion from the current ¥400 billion. Last month, weak demand at auctions sent yields on 30- and 40-year bonds to record highs. The selloff was also driven by growing concerns over Japan's fiscal trajectory. The finance ministry has pushed back on speculation that it might also try to help ease concerns over insufficient demand by buying back bonds as soon as next month, calling that unrealistic. The ministry will explain its stance on buybacks at Friday's meeting with market participants, according to a person familiar with the matter. Even if the planned adjustments go ahead, the finance ministry will still face the challenge of finding alternative investors to absorb the slack as the central bank continues its tapering. Under the BOJ's latest plans, its monthly purchases of JGBs would shrink to around ¥2.1 trillion, and its total holdings would slide to about ¥490 trillion, by the end of March 2027. Japan remains heavily reliant on bond issuance to finance spending. Japan's projected debt-to-GDP ratio of 232.7% this year is still the highest among developed economies, feeding into concerns about the nation's fiscal stability. About a quarter of the initial budget for fiscal 2025 was allocated to debt-servicing costs alone, underscoring the country's vulnerability to rising yields. The concerns have been fanned by policy measures floated by political parties ahead of a national election in July. Parties are preparing to unveil costly proposals aimed at securing voter support. The ruling Liberal Democratic Party is planning yet another round of cash handouts to households. The Democratic Party for the People, a key opposition force, has called for cutting the national sales tax to 5% across the board, a more expensive choice, with additional bond issuance floated as a possible funding source. Against this backdrop, investors are in need of reassurance that the balance of supply and demand in the JGB market will be restored without yields rocketing. --With assistance from Mia Glass. (Adds finance minister comments, yesterday's market reaction.) Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants ©2025 Bloomberg L.P. Sign in to access your portfolio
Bloomberg
12 hours ago
- Business
- Bloomberg
Japan to Sound Out Market Players on Tweaks to Bond Issuance
Japan's Finance Ministry will seek feedback from market players later Friday over its planned reductions to super-long bond issuance as it takes steps to quell market turbulence. The ministry will hold a meeting with primary dealers at 4 p.m. in Tokyo to discuss recent market developments and its issuance plans. A draft of its revised bond plan seen by Bloomberg showed that authorities will propose cutting issuance of 20-, 30- and 40-year bonds by ¥100 billion ($690 million) each per auction through March 2026. To offset the reduction in sales of longer maturities, the ministry is looking to increase issuance of 2-year and shorter-dated debt, the plan showed.
