Japan’s 30-year bond auction draws interest

Japan’s recent auction of 30-year sovereign notes garnered substantial interest on Thursday, as the rise in yields following global debt market turmoil attracted long-term investors.

In a sale by the Ministry of Finance involving ¥900 billion ($6.1 billion) of benchmark bonds set to mature in June 2054, the average bid-to-cover ratio increased to 3.47, marking the highest level in two months. The lowest price accepted for these bonds was ¥99.3, which surpassed market expectations of ¥99.15. However, the tail, or the difference between the average and the lowest-accepted prices, widened to 0.17, indicating that demand has not yet fully rebounded.

Despite a global bond rally this week driven by speculation that the Federal Reserve and other central banks might cut interest rates, longer-term Japanese notes have experienced declines due to concerns over rising borrowing costs in Japan. This 30-year auction follows a lacklustre sale of benchmark 10-year sovereign notes on Tuesday, where yields fell sharply after a rate hike by the Bank of Japan (BOJ), contributing to the volatility in global markets.

Attribution: Reuters