Japanese bonds decline for first time in month
Monday, 17 May 2010
TOKYO, May 16 (Bloomberg): Japanese bonds fell for the first time in more than a month on concern the nation's mounting debt will damp demand at the next two auctions of the securities.
The finance ministry will sell a total of 3.5 trillion yen ($37.8 billion) in five- and 20-year bonds next week. Bidding at the 300 billion yen offering of 40-year debt on May 13 slid to the lowest since the tenor was first offered in 2007.
"We can't also overlook the underlying fiscal risk in Japan," said Tadashi Matsukawa, a Tokyo-based manager of the fixed-income division at PineBridge Investments Japan Co, which oversees the equivalent of $65.3 billion. Longer-maturity bonds are "vulnerable" to sovereign risk, he said.
The yield of the benchmark 10-year bond rose 1.5 basis points over the week to 1.295 per cent at Japan Bond Trading Co, the nation's largest interdealer debt broker. It climbed to 1.325 per cent on May 12, the highest level since April 26. The last time the debt completed a weekly loss was on April 9. Yields declined 1.5 basis points yesterday.
Ten-year bond futures for June delivery fell 0.06 to 139.85 this week in Tokyo. They gained 0.16 yesterday.
Buying of bonds was limited before reports next week that economists said will show machinery orders increased in March and economic growth quickened in the first quarter.
Japan will sell 2.4 trillion yen in five-year notes on May 18 and 1.1 trillion yen in 20-year bonds on May 20. Debt was a record 882.9 trillion yen as of March 31, up 4.3 per cent from a year earlier, the finance ministry said this week.
Greece's fiscal crisis provides a lesson and Japan needs to improve its financial condition, Masaaki Kaizuka, director of debt management at the ministry, said on May 12.
"Given Japan's demographics, the current account surplus may decrease and some even say it will go into deficit, although it's hard to predict when that would happen," Kaizuka, said at a conference in Tokyo.
"We may see the need to increase reliance from abroad whether we want to or not."
The finance ministry will sell a total of 3.5 trillion yen ($37.8 billion) in five- and 20-year bonds next week. Bidding at the 300 billion yen offering of 40-year debt on May 13 slid to the lowest since the tenor was first offered in 2007.
"We can't also overlook the underlying fiscal risk in Japan," said Tadashi Matsukawa, a Tokyo-based manager of the fixed-income division at PineBridge Investments Japan Co, which oversees the equivalent of $65.3 billion. Longer-maturity bonds are "vulnerable" to sovereign risk, he said.
The yield of the benchmark 10-year bond rose 1.5 basis points over the week to 1.295 per cent at Japan Bond Trading Co, the nation's largest interdealer debt broker. It climbed to 1.325 per cent on May 12, the highest level since April 26. The last time the debt completed a weekly loss was on April 9. Yields declined 1.5 basis points yesterday.
Ten-year bond futures for June delivery fell 0.06 to 139.85 this week in Tokyo. They gained 0.16 yesterday.
Buying of bonds was limited before reports next week that economists said will show machinery orders increased in March and economic growth quickened in the first quarter.
Japan will sell 2.4 trillion yen in five-year notes on May 18 and 1.1 trillion yen in 20-year bonds on May 20. Debt was a record 882.9 trillion yen as of March 31, up 4.3 per cent from a year earlier, the finance ministry said this week.
Greece's fiscal crisis provides a lesson and Japan needs to improve its financial condition, Masaaki Kaizuka, director of debt management at the ministry, said on May 12.
"Given Japan's demographics, the current account surplus may decrease and some even say it will go into deficit, although it's hard to predict when that would happen," Kaizuka, said at a conference in Tokyo.
"We may see the need to increase reliance from abroad whether we want to or not."