Japanese Bonds May Fall for Third Day Before 10-Year Debt Sale
Published May 8th, 2007
apan’s bonds may drop for a third day, the longest slide since January, on concern brokers will reduce their holdings to make room for new debt being sold today.
The Ministry of Finance set a 1.7 percent coupon on the 1.9 trillion yen ($15.8 billion) of new 10-year government bonds it will auction, the same payout as the previous five sales. The ministry will accept bids until noon and release the results at 12:45 p.m. local time in Tokyo.
“Movement in bonds will be limited until the auction results come out,” said Tsutomu Kawasaki, who helps manage the equivalent of $19.5 billion in Japanese bonds in Tokyo at Pension Fund Association, which has more than 1,600 corporate pension funds as members. “It’s preferable to have a higher coupon on bonds.”
The yield on the 1.7 percent bond due in March 2017 rose half a basis point to 1.645 percent as of the 11:05 a.m. morning close at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price fell 0.043 yen to 100.466 yen. A three-day drop would be the longest since a four-day slump ended Jan. 4. A basis point is 0.01 percentage point.
The 1.7 percent coupon announced today matched the median estimate of a Bloomberg News survey of eight traders, analysts and investors.
Yields on 10-year debt are low compared with those of five- year notes, said Katsutoshi Inadome, a fixed-income strategist in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan’s biggest bank.
Related Articles
