By Reuters
TOKYO: Japanese government bonds (JGBs) fell on Thursday as the finance ministry carried out its first super-long debt auction under a reduced-issuance scheme introduced in response to record-high yields.
Prices of the benchmark JGB declined, sending its yield up 2 basis points (bps) to 1.445%.
The 20-year yield rose 2 bps to 2.345%.
The 30-year JGB gained 1.5 bps to 2.9%. Yields move inversely to bond prices.
The market for JGBs, particularly long-dated bonds, has faced challenges of late amid the Bank of Japan’s (BOJ) tapering of bond purchases, softer demand from life insurers and concerns over the nation’s fiscal health.
A 20-year JGB auction in May saw the weakest demand since 1987 and the subsequent sales of 30- and 40-year securities saw subdued uptake in the market.
Yields on the super-long debt surged to record levels, prompting the government to curtail the issuance of the securities. The Ministry of Finance sold about 700 billion yen ($4.9 billion) of 30-year JGBs on Thursday, down from about 800 billion yen at the previous auction.
The auction’s bid-to-cover ratio, a measure of demand, was 3.58 versus 2.92 in June.
The tail, another measure of demand, was 0.31 yen versus 0.49 yen previously.
Benchmark JGB futures held declines after the sale.