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JGBs drop ahead of 20-year sale, pressured by early election
November 15, 2012 / 2:45 AM / 5 years ago

JGBs drop ahead of 20-year sale, pressured by early election

TOKYO, Nov 15 (Reuters) - Japanese government bond prices fell on Thursday as investors sold ahead of a 20-year sale, and the expected dissolution of parliament this week to clear the way for a general election.

* Japanese Prime Minister Yoshihiko Noda is set to dissolve parliament’s lower house on Friday for a snap election on Dec. 16, in which his party is likely to fare poorly.

Shinzo Abe, leader of the main opposition Liberal Democratic Party, is likely to be Japan’s next leader, and usher in more expansive fiscal policies while increasing pressure on the Bank of Japan for more aggressive stimulus.

* “Concern about the domestic political situation is pushing up yields, but still, you can’t describe benchmark yields as ‘high.’ One percent seems very far away from here,” said a fixed-income fund manager at a European asset management firm in Tokyo.

“Today’s 20-year sale should be smooth, with no surprises,” he added.

* The Ministry of Finance offered 1.2 trillion yen of 20-year notes, reopening the number 140 issue for the second time with a coupon of 1.7 percent.

* The 10-year JGB futures contract ended morning trade down 0.12 point at 144.35.

* In cash trading, 10-year yields rose 2 basis points to 0.755 percent, their highest in a week.

* The yields on 30-year bonds, the most sensitive to political concerns, added 3.5 basis points to 1.940 percent, also their highest in a week. Yields on 20-year debt rose 3 basis points to 1.685 percent, their highest since Nov. 7.

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