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Japan Times
10 hours ago
- Business
- Japan Times
Japan surprises with plan for bigger cut to superlong bond issuance
Japan is planning to cut the issuance of superlong bonds this year by more than earlier reported as it tries to restore calm to a market spooked by recent record highs in yields. The Finance Ministry proposed reducing the issuance of 20-, 30- and 40-year bonds by a total of ¥3.2 trillion ($22 billion) through the end of March 2026, according to a plan presented by the ministry during a meeting with primary dealers on Friday. The latest plan from the ministry showed a reduction to 20-year bond issuance that is twice the size suggested in draft documents, underscoring the level of concern among policymakers over rising borrowing costs. A poorly received auction of 20-year bonds by Japan last month rippled through global markets that are on edge over the risks posed by rising government debt levels. To compensate for the cuts in superlongs, the ministry is considering boosting the issuance of shorter-term debt, particularly six-month U.S. Treasury bills, the plan showed. The extra reduction for the 20-year bond issuance is "positive for the bond market,' said Mari Iwashita, executive rates strategist at Nomura Securities. "Still, whether the decline in liquidity and high volatility in superlong bonds will improve will depend on if there is solid demand in the upcoming 20- and 30-year bond auctions.' The yen curve flattened, led by a drop in long-end rates after the release of the updated plan. The planned revision to the ministry's bond issuance plan this year is the second move by policymakers this week to respond to an imbalance between supply and demand that has emerged in Japan's bond market. Earlier this week, the Bank of Japan said it would slow down its withdrawal from the market from next year in a move aimed at ensuring stability. The BOJ still has a massive footprint in Japan's bond market, with ownership of around half the nation's outstanding central government debt and would still be buying around ¥2.1 trillion of bonds per month in early 2027 under its new plan. Still, the void created by the smaller BOJ purchases is ruffling bond market dynamics as it hasn't been filled by renewed buying from private-sector banks and life insurers. That gap has fueled much of the choppy downward pressure on bond prices and pushed up yields. The problems are particularly acute in the superlong end of the market due partly to separate changes to regulations that have limited the appeal of those bonds for banks while reducing the need for life insurers to buy them. Growing concerns over Japan's fiscal trajectory and expanding deficits globally including in the U.S. are also feeding into reluctance to pick up debt of 20 years or more. "The ministry publicized its revised plan sooner than anticipated to ward off the risk of a failed 20-year bond auction on June 24 and to avert the market volatility seen in May,' said Shoki Omori, chief strategist at Mizuho Securities. "In light of these announcements, superlong-term auctions are poised to regain a measure of stability.' Under the latest plan, total issuance of 20-year bonds will decrease by ¥1.8 trillion to ¥10.2 trillion over the fiscal year. Meanwhile, the supply of 30- and 40-year bonds is expected to be reduced by ¥900 billion and ¥500 billion, respectively. The ministry is also planning to cut offerings in liquidity-enhancing auctions for 15.5- to 39-year maturities by ¥100 billion per auction. A Finance Ministry official briefing reporters Friday said that the plan will likely become officially approved on Monday or Tuesday. He added that the last time the bond issuance plan was changed during the fiscal year for a reason unrelated to budgets was in 2009. On buybacks, the official said that some market participants had asked for purchases of superlong bonds while others said buybacks would hurt the autonomy of the market. The ministry isn't working on implementing buybacks for now, and it's not something that can be implemented soon. Even if the planned adjustments go ahead, the Finance Ministry will still face the challenge of finding alternative investors to absorb the slack as the central bank continues its tapering. Japan remains heavily reliant on bond issuance to finance spending. Japan's projected debt-to-gross domestic product ratio of 232.7% this year is still the highest among developed economies, feeding into concerns about the nation's fiscal stability. About a quarter of the initial budget for fiscal 2025 was allocated to debt-servicing costs alone, underscoring the country's vulnerability to rising yields. The concerns have been fanned by policy measures floated by political parties ahead of a national election in July. Parties are preparing to unveil costly proposals aimed at securing voter support. The ruling Liberal Democratic Party is planning yet another round of cash handouts to households. The Democratic Party for the People, a key opposition force, has called for cutting the national sales tax to 5% across the board, a more expensive choice, with additional bond issuance floated as a possible funding source. Against this backdrop, investors are in need of reassurance that the balance of supply and demand in the JGB market will be restored without yields rocketing.
Yahoo
13-06-2025
- Business
- Yahoo
Exclusive-SBI Shinsei Bank plans to file in July to relist by year-end, sources say
By Miho Uranaka TOKYO (Reuters) -SBI Shinsei Bank, a unit of SBI Holdings, plans to file as early as next month for a relisting on the Tokyo Stock Exchange, two people familiar with the matter said. The bank, which is aiming to go public again by the end of the year, would follow a series of sizeable listings in Japan over the past year as companies look to capitalise on market momentum that has seen the Nikkei share average trade near record highs. SBI Shinsei's predecessor went bankrupt in 1998 and was nationalised. It became a subsidiary of SBI Holdings in 2021 and was delisted in 2023. The mid-sized lender is aiming for a valuation of around 1.5 trillion yen ($10.46 billion), one of the people said, around double the current value of JX Advanced Metals, which listed in March. The final figure will depend on market conditions, and the offering size is yet to be finalised, the person added. SBI group companies are expected to offload some of their stake in SBI Shinsei Bank in the float, one of the people said. The bank tapped Nomura Securities and Goldman Sachs this month as joint global coordinators for the listing, and several other underwriters have been selected to join the group, the sources said. The people declined to be identified as the information is not public. SBI Holdings said it has maintained for some time it is considering listing SBI Shinsei Bank and that the July filing and year-end listing are not something it is aware of. Nomura and Goldman Sachs declined to comment. SBI Shinsei Bank did not respond to a request for comment. Last month, SBI Holdings raised approximately 290 billion yen by issuing new shares to NTT and selling its stake in SBI Sumishin Net Bank to NTT Docomo. The proceeds of that are intended to repay the roughly 230 billion yen in public funds injected into Shinsei Bank. The repayment of the public funds is expected to be completed before the relisting, one of the people said. ($1 = 143.4700 yen) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNA
13-06-2025
- Business
- CNA
Exclusive-SBI Shinsei Bank plans to file in July to relist by year-end, sources say
TOKYO :SBI Shinsei Bank, a unit of SBI Holdings, plans to file as early as next month for a relisting on the Tokyo Stock Exchange, two people familiar with the matter said. The bank, which is aiming to go public again by the end of the year, would follow a series of sizeable listings in Japan over the past year as companies look to capitalise on market momentum that has seen the Nikkei share average trade near record highs. SBI Shinsei's predecessor went bankrupt in 1998 and was nationalised. It became a subsidiary of SBI Holdings in 2021 and was delisted in 2023. The mid-sized lender is aiming for a valuation of around 1.5 trillion yen ($10.46 billion), one of the people said, around double the current value of JX Advanced Metals, which listed in March. The final figure will depend on market conditions, and the offering size is yet to be finalised, the person added. SBI group companies are expected to offload some of their stake in SBI Shinsei Bank in the float, one of the people said. The bank tapped Nomura Securities and Goldman Sachs this month as joint global coordinators for the listing, and several other underwriters have been selected to join the group, the sources said. The people declined to be identified as the information is not public. SBI Holdings said it has maintained for some time it is considering listing SBI Shinsei Bank and that the July filing and year-end listing are not something it is aware of. Nomura and Goldman Sachs declined to comment. SBI Shinsei Bank did not respond to a request for comment. Last month, SBI Holdings raised approximately 290 billion yen by issuing new shares to NTT and selling its stake in SBI Sumishin Net Bank to NTT Docomo. The proceeds of that are intended to repay the roughly 230 billion yen in public funds injected into Shinsei Bank. The repayment of the public funds is expected to be completed before the relisting, one of the people said. ($1 = 143.4700 yen)
Business Recorder
10-06-2025
- Business
- Business Recorder
Japanese shares rise for third day on tech optimism, JGB support
TOKYO: Japanese shares climbed on Tuesday for a third consecutive day, buoyed by gains in technology stocks and investor optimism over the government's efforts to stabilise the debt markets. The Nikkei 225 Index climbed 0.9% while broader Topix was up 0.5%. There were 171 advancers on the Nikkei index against 52 decliners. Stocks advanced alongside Japanese government bonds (JGBs), which have been moving increasingly in tandem amid rising concerns over the country's fiscal health and borrowing costs. Japanese Finance Minister Katsunobu Kato said the government will work to ensure confidence in the JGB market, a day after Reuters reported the finance ministry is considering buying back some super-long-dated bonds to contain rising yields. 'We see lower interest rates and a stable dollar-yen exchange rate as supporting the Japanese stock market today,' said Maki Sawada, an equities strategist at Nomura Securities. Chip-sector suppliers Advantest and Shin-Etsu Chemical jumped 4% and 2.4%, respectively, following a nearly 2% surge in the Philadelphia SE semiconductor index overnight. Japan's Nikkei jumps as chip stocks rally ahead of Sino-US talks Shares of Mazda Motor rose 1.4% as the yen weakened to the 145 level against the dollar, providing a boost to exporters. The top percentage gainer in the Nikkei was Sumitomo Pharma , which jumped 5.8%, followed by motor maker Nidec, up 4.8%. Space startup ispace, which had a second moon lander crash into the lunar surface last week, saw its shares rebound 5.2% after they fell by their daily limit for two straight sessions.
Zawya
09-06-2025
- Business
- Zawya
Japan's Q1 GDP contraction narrows on consumption improvement, revised figure shows
TOKYO - Japan's economy contracted less than initially estimated in the January-March quarter, government data showed on Monday, with consumption figures revised upwards at a time when uncertainty surrounding U.S. tariffs is clouding the outlook. Gross domestic product shrank an annualised 0.2% in the three months through March 31, showed revised data from the Cabinet Office, rather than 0.7% announced on May 16 which matched economists' median forecast. Versus the previous quarter, the revision translates as flat in price-adjusted terms compared with an initially estimated 0.2% contraction. The revision does little to allay analyst concern that economic growth was losing momentum even before U.S. President Donald Trump implemented his so-called reciprocal tariffs on April 2. "It wasn't a revision that changed our view on the overall economy," said economist Uichiro Nozaki at Nomura Securities. Private consumption, which accounts for more than half of Japan's economy, grew 0.1%, versus flat in the initial reading. Contributing to the revision was the inclusion of restaurant and games sales data which has since become available. The capital expenditure component of GDP, a barometer of private demand-led strength, expanded 1.1% in the first quarter, revised from 1.4%. Economists had estimated 1.3%. An upward revision in private inventory contributed to reducing the degree of contraction in the overall figure, the government said. External demand, or exports minus imports, knocked 0.8 percentage point off growth, as in the initial reading. Conversely, domestic demand contributed 0.8 percentage point. Japan faces a 24% U.S. tariff from July unless it can negotiate a lower rate. With automobile-related companies comprising Japan's biggest industry, the government is also seeking an exemption for Japan's automakers from a 25% tariff. "In terms of the April-June quarter and beyond, there are a number of concerns, such as worries about exports and weak domestic demand," said economist Kazutaka Maeda at Meiji Yasuda Research Institute. "It is unclear how the tariff negotiations will turn out, but given the scale of the automotive industry, it will be difficult for the U.S. to back down easily, meaning the talks will be quite difficult." Policymakers and analysts are concerned that trade tension unleashed by U.S. tariffs may complicate the Bank of Japan's efforts to normalise monetary policy. The central bank is set to hold a two-day policy meeting early next week. Monday's revised data is not likely to have much influence on the meeting outcome, said Nomura's Nozaki. The BOJ is more concerned about tariff negotiations and their impact on exports and the overall economy once they are concluded. "For the BOJ, the basic approach to assessing the economy will be to monitor both the immediate data and the status of negotiations" to make policy decisions, Nozaki said. (Reporting by Satoshi Sugiyama; Additional reporting by Makiko Yamazaki and Yoshifumi Takemoto; Graphics by Pasit Kongkunakornkul; Editing by Chang-Ran Kim and Christopher Cushing)
