March 6, 2014 / 3:25 AM / 4 years ago

Benchmark JGBs inch down ahead of 30-year sale

TOKYO, March 6 (IFR) - Benchmark Japanese government bond prices eased slightly on Thursday, as investors made room in their portfolios to buy at this session’s 30-year sale.

Some dealers continued to sell 10-year and 20-year JGBs for hedging purposes, to bid on the new 30-year JGBs offered in the auction, while a few life insurers and pension funds continued to buy longer maturities on dips.

The Ministry of Finance set the coupon on the new 30-year JGBs at 1.7 percent, unchanged from the previous sale. The ministry offered 600 billion yen ($5.9 billion) worth of 30-year JGBs this month, up from 500 billion yen last month, as no quarterly 40-year JGB auction was scheduled in March.

The 30-year JGB yield has been moving in a range between 1.57 percent and 1.725 percent since the beginning of this year, and was flat on the day on Thursday at 1.630 percent. JGB players expect the auction to go relatively smoothly, ahead of the massive quarterly redemption of JGBs set for March 20.

At midday, the yield on the current 10-year JGB was up 0.5 basis point from the previous day at 0.615 percent, while the 20-year yield added 0.5 basis point to 1.440 percent.

Lead March JGB futures moved in a 145.09-145.22 range before finishing the morning up 0.06 at 145.18.

Advisers to Japan’s $1.26 trillion public pension fund on Thursday recommended targeting only slightly higher returns, a conservative proposal that could constrain the fund’s ability to shift to riskier assets.

Prime Minister Shinzo Abe’s government is pressing the Government Pension Investment Fund (GPIF) to buy more stocks and invest relatively less in bonds to generate higher returns for Japan’s fast-greying population.

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