TOKYO Nov 1 Japanese government bonds fell on
Thursday, but were off the session's lows after a 10-year sale
went as smoothly as most market participants had expected.
The Ministry of Finance offered 2.3 trillion yen ($29
billion) worth of 10-year notes, reopening the number 325 issue
with a coupon of 0.8 percent for the third time.
The ministry sold the bonds at a lowest accepted price of
100.20, in line with market expectations. The bid-to-cover ratio
was 4.05, up from 3.40 at the previous tender, and the tail
between the average and lowest accepted prices shrank slightly
to 0.01 from 0.02 at the previous sale.
Reopenings are offerings of securities with the same terms
and conditions as an existing one, used to increase the
liquidity of an outstanding issue.
"It is noteworthy that last week's 5-year sale was also a
reopen, as was the 20-year sale before that. This shows how
stably JGBs have been trading lately," said a fixed-income fund
manager at a Japanese asset management firm.
Against this backdrop of low volatility, recent 10-year
sales have met solid market demand, as the benchmark bond is the
most liquid and has recently offered higher carry and rolldown
compared with other sectors, market participants said.
In a carry and rolldown strategy an investor buys a bond and
aims for capital gains, as a bond's value increases as it
matures if the yield curve is steady.
The 10-year yield added half a basis point to
0.775 percent, after rising as high as 0.785 percent before the
auction results, its highest since Oct. 23. Benchmark yields
remain solidly within the 4 basis-point range between 0.755
percent and 0.795 percent in which they have moved since Sept
Ten-year JGB futures were down 0.13 point at
144.11, but above a session low of 143.91 before the auction
The recently-battered superlong sector stabilized, though
activity was said to be thin. Yields on 20-year debt
fell 1 basis point to 1.680 percent, while those
on the 30-year bonds lost half a basis point to