March 17, 2020 / 7:05 AM / 18 days ago

Japan considering cutting inflation-linked bond sales as coronavirus spreads, sources say

TOKYO, March 17 (Reuters) - Japan’s Ministry of Finance is considering reducing its issuance of inflation-linked Japanese government bonds in the next fiscal year, two government sources said, as inflation expectations have been hit by the coronavirus outbreak and a market sell-off.

The ministry will discuss the idea with primary dealers including banks and brokerage firms next week, said the sources, who declined to be identified because the plan is not yet public. The issuance in May will likely to be cut from a planned 400 billion yen ($3.8 billion) to 300 billion yen, they said.

The yield spread, called the breakeven inflation (BEI) rate, is widely seen as a measure of investors’ inflation expectations. It has dived as global stock prices have plunged during the coronavirus outbreak. (Reporting by Takaya Yamaguchi and Takashi Umekawa; Editing by David Dolan)

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