TOKYO Feb 21 Prices on long-dated Japanese
government bonds eased on Thursday, ahead of an auction of 1.2
trillion yen ($12.8 billion) worth of 20-year debt.
* The 20-year yield inched up 1 basis point
to 1.765 percent, while the 30-year yield put on
1.5 basis points, to 1.940 percent.
* Yuya Yamashita, rates strategist at J.P. Morgan, said he
did not expect the auction would see strong demand.
"From the perspective of absolute yield level, it's not that
attractive for the usual investors (life insurers)," he said.
"But there is a positive factor as well, which is the relative
value ... the cheapness of the 20-year sector."
"The first factor should outweigh the second one, so the
auction will not be that strong."
* The Ministry of Finance offers a coupon of 1.80 percent,
the highest level since March last year.
* "The 20-year/30-year spread has been flattened since
December. The pace of flattening has been overly rapid. It will
not be a surprise, if we see temporary adjustment of the recent
trend," Yamashita said.
* The spread between the 20- and 30-year bonds stood at 17.5
basis points, up from an 8-1/2-month low of 15.5 basis points
touched in the previous session.
* Nomura Securities, however, recommend investors holding
20-year debt against 30-year bonds for the long term. "Shifting
out of 30s to 20s would result in 3 basis points of positive
roll/carry over a six-month period," it said in a note.
* The 10-year yield were unchanged at 0.740
percent, though 10-year JGB futures gained 6 ticks to