TOKYO: Japan’s government plans to cut sales of super-long bonds by about 10 per cent from the original plan in a rare revision to its bond programme for the current fiscal year, trimming overall bond issuance as a result, a draft document seen by Reuters showed.
The move aims to soothe market concerns over supply-demand imbalances, after weak demand at recent auctions and a surge in super-long yields to record high levels last month rattled the bond market.
The step also follows the Bank of Japan’s decision this week to decelerate the pace of bond purchases reductions from next fiscal year, signalling its preference to move cautiously in removing remnants of its massive, decade-long stimulus.
The revised issuance plan will be presented to primary dealers for discussion at a meeting on Friday.
Additionally, there are also ideas of buying back some previously issued super-long JGBs with low interest rates to improve the supply-demand balance.
The planned reduction in 20-, 30- and 40-year super-long bond sales would be partly offset by increased issuance of shorter-term notes, as well as bonds specifically designed for households.
As a result, the total Japanese government bond (JGB) scheduled sales for the year through next March are set to fall by ¥500 billion (US$3.44 billion) to ¥171.8 trillion, according to the draft of the revised bond programme.
