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Japan to auction 155.1 trln yen JGBs in 2014/15
December 24, 2013 / 1:45 AM / 4 years ago

Japan to auction 155.1 trln yen JGBs in 2014/15

Dec 24 (Reuters) - Japan's government said on Tuesday it
plans to issue 155.1 trillion yen ($1.49 trillion) in government
bonds in the fiscal year that begins next April, the first
planned year-on-year reduction in JGB issuance into markets
since 2008.
    Worried about its snowballing public debt, the Ministry of
Finance also aims to extend the average maturity of its debt, by
increasing 30-year bond sales by 1.2 trillion yen a year while
reducing two-year notes by 2.4 trillion yen.
    The announcement is in line with what sources told Reuters
on Sunday as well as with market expectations.
    The government also said it will increase issuance of
inflation-linked bonds to 1.6 trillion yen, an increase of 1
trillion yen, during the 2014/15 fiscal year.
    The average maturity of its new debt will rise to eight
years and five months in 2014/15 from seven years and 11 months
in the current fiscal year.
    Below is the finance ministry's breakdown of debt to be sold
through regular auction by maturity. Figures in brackets are
comparisons with fiscal 2013/14.
         
    JGB OFFER THROUGH REGULAR AUCTION
 Maturity                    issue per auction
 40-yr (quarterly)           400 billion yen      (unchanged)
 30-yr*                     600-700 billion yen  (up Y100 bln)
 20-yr                       1.2 trillion yen     (unchanged)
 10-yr                       2.4 trillion yen     (unchanged)
  5-yr                       2.7 trillion yen     (unchanged)
  2-yr                       2.7 trillion yen   (down Y200 bln)
  1-yr TBs                 2.2-2.3 trillion yen       (**)   
 10-yr CPI-linked(quarterly) 400 billion yen   (up Y100 bln***)
 Liquidity enhancement****   700 billion yen     (up Y100 bln)  
              
---------------------------------------------------------    
 TOTAL                     155.1 trillion yen 
    
    Notes:
    *The Ministry of Finance will offer 600 billion yen in May,
Aug, Nov and Feb, when it will issue 40-year JGBs as well. It
will offer 700 billion yen in the remaining months.
    
    ** The Ministry plans to offer 2.5 trillion yen of one-year
discount notes a month, the same levels as 2013/14, by combining
them with one-year financing bills.
    
    *** The ministry is only offering inflation-linked bonds
twice in the current fiscal year.
    
    **** In a liquidity enhancement auction, the Ministry of
Finance reopens off-the-run 20- and 30-year JGBs to boost their
liquidity.
          
    
   On top of offers through regular auction, the ministry offers
JGBs through other channels. Below is the breakdown of total
debt issues. 
    
                               2014/15              2013/14

 -------------------------------------------------------------- 
 
  Regular auction               155.10               156.60
  Second auction 1)               4.47                 4.48
  Adjustment b/w years 2)         8.37                -4.23     
           
  Saving bonds                    2.50                 2.00
  BOJ rollover 3)                11.10                11.70 
--------------------------------------------------------------- 
  
  Total debt issues             181.54               170.55
    
    
    1) The Ministry of Finance sells extra bonds after each
auction to primary dealers who want to buy an additional amount.
    
    2) The Ministry sometimes offers more bonds than planned,
allowing it to "front-load" its bond issuance ahead of the
fiscal year. Such advance-borrowing for 2014/15 is expected to
have reached more than 20 trillion yen at the start of 2014/15,
giving the ministry some leeway to reduce its JGB issuance.
    
    3)Under an agreement with the Ministry of Finance, the Bank
of Japan rolls over for one year some of the maturing JGBs it
holds.

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