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4d ago

Japan Plans to Cut Super-Long Bond Sales as Yields Surge

Officials hope adjustments to debt issuance will stabilize borrowing costs to ease pressure on public finances.

A passerby walks past in front of the Bank of Japan headquarters in Tokyo, Japan January 23, 2025. REUTERS/Issei Kato/File Photo
Image
Yen and U.S. dollar banknotes are seen in this illustration taken March 19, 2025. REUTERS/Dado Ruvic/Illustration
A man looks at an electronic stock quotation board outside a brokerage in Tokyo, Japan, November 9, 2016. Picture taken with slow shutter speed. REUTERS/Issei Kato/File Photo

Overview

  • The Ministry of Finance is considering trimming issuance of 20-, 30- and 40-year government bonds to calm soaring long-term yields.
  • Super-long bond yields fell sharply after the proposal, with the 30-year note sliding to about 2.88% and the 20-year yield to 2.45%.
  • A 500 billion yen auction of 40-year bonds drew a bid-to-cover ratio of just 2.21, the weakest demand since July 2024.
  • The Bank of Japan’s holdings of long-term government bonds dropped by 11.4 trillion yen through March, marking the first decline since 2008 under its taper programme.
  • BOJ Governor Kazuo Ueda warned that large swings in super-long yields could affect broader borrowing costs and will review the pace of bond tapering in June.