Japan to cut super-long-term bond issuances amid rising yields
TOKYO (Kyodo) -- The Japanese government said Friday it plans to reduce issuances of super-long-term bonds from July in a rare review of its original program in the middle of a fiscal year amid concern over a recent surge in yields.
But the total amount of bonds scheduled for issuance in the current fiscal year through March 2026 is projected to remain unchanged from the initial plan at 176.9 trillion yen ($1.2 trillion), as the Finance Ministry seeks to increase sales of short-term bonds.
The revised plan was presented to bond market participants during a meeting hosted by the ministry and is likely to be formalized, subject to adjustment if necessary, an official said.
The move comes as yields on 20-, 30- and 40-year bonds have surged since April, partly due to concerns over Japan's fiscal health following growing calls from opposition parties to cut taxes.
In its latest policy meeting earlier this week, the Bank of Japan, the biggest holder of government bonds, decided to slow the pace of its debt-buying reduction from next year, aiming to prevent a sharp rise in yields and broader market turbulence from rapid tapering.
During the previous gathering ended May 1, some BOJ board members expressed the view that the government bond markets had been "divided by maturity," as seen in the significant rise in yields on super-long-term bonds, according to the minutes released Friday.
Some members noted that the number of participants in the super-long-term bond markets "was limited in the first place" and that the rise in the yields of those bonds was attributable to factors such as a decline in investor demand, the minutes also said.
Analysts have said reduced purchases by key institutional investors, including life insurers, were among the reasons for the jump in yields, which move inversely to prices.
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