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Japan Weighs Buyback of Super-Long Bonds to Curb Record Yields

Officials will meet investors later this month to decide how to rein in yields that reached multi-decade highs

Japan's Finance Minister Katsunobu Kato speaks during an interview with Reuters at the Finance Ministry in Tokyo, Japan April 17, 2025. REUTERS/Issei Kato/File Photo
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Overview

  • The government is considering repurchasing 20-, 30- and 40-year JGBs issued at low rates to alleviate abrupt increases in super-long yields.
  • The Finance Ministry will hold meetings with bond market participants on June 20 and June 23 before reaching a final decision on any buyback plan.
  • Any repurchase initiative will require parliamentary approval of additional budget allocations and is expected to take time to execute.
  • Yields on 30-year government bonds surged to as high as 3.185% on May 21 due to waning demand from life insurers and concerns over rising debt levels.
  • Tokyo also plans to reduce new super-long bond issuance while the BOJ is likely to maintain its current bond-taper programme at its June 16-17 policy meeting.