| TOKYO, March 12
TOKYO, March 12 Japanese government bonds edged
up on Wednesday, as share prices swung lower in Japan and across
Asia on concerns about the economic uncertainty in China and
United States as well as political tensions in Ukraine.
The benchmark 10-year cash yield dipped 0.5
basis point to 0.620 percent, while June 10-year futures
climbed 0.09 point to 144.84.
Still, reaction to the Nikkei's 2.2 percent slide
was relatively mild, having become a familiar sight for a market
that has become largely numbed to external factors due to the
Bank of Japan's massive purchases of government debt.
The amount bought by the central bank as a part of its
quantitative easing programme equates to roughly 70 percent of
newly issued debt.
The market showed muted response to a report in the Nikkei
business daily on Wednesday that the Ministry of Finance is
considering requiring brokerages and large banks to take part in
bond sales known as liquidity-enhancing auctions.
The idea, which would form a part of market reforms, was
floated during a regular meeting between the MOF and primary
dealers last year.
The MOF conducts liquidity-enhancing auctions to sell extra
amounts of outstanding JGBs that are in demand in the market.
Currently it is the only auction in which participation is
"The new regulation may not have much market impact, as
participants will be required to take part in the sales but
won't actually have to buy," said Katsutoshi Inadome, a
fixed-income strategist at Mitsubishi UFJ Morgan Stanley.
"Still, it may help smoothen out these auctions, as those
taking part in the sales will have to better gauge investor
demand before presenting their requests to the MOF," Inadome
Before each liquidity-enhancing auction primary dealers
present the MOF with requests for particular JGB issues they
would like to purchase.
The MOF will increase the amount sold at liquidity-enhancing
auctions to 700 billion yen ($6.78 billion) per sale starting in
April from the current 600 billion yen, and liquidity may
improve as a result of the new changes, said Hidenori Suezawa,
chief bond strategist at SMBC Nikko Securities.