December 21, 2018 / 1:25 AM / 6 months ago

Japan to cut JGB issuance by 4.8 trillion yen in 2019/20

    TOKYO, Dec 21 (Reuters) - Japan's Finance Ministry is
planning to issue 129.4 trillion yen  ($1.2 trillion) of
Japanese government bonds (JGBs) to markets in the coming fiscal
year, 4.8 trillion yen ($43 billion) less than in the current
year, the ministry said on Friday.
    That would mark the sixth consecutive year of reduced sales,
owing to some improvements in Japan's fiscal balance as well as
declines in the need to roll over maturing debts as the country
has gradually extended its average debt maturity.
    The weighted average maturity of JGBs is expected to reach
nine years and two months in the fiscal year that begins in
April, compared with seven years in fiscal 2011/12.
    In 2019/20, the ministry plans to reduce the issuance of
two-, five-, 10- and 20-year maturities, each by 100 billion yen
per month from the current fiscal year, it said.
    The announcement is in line with a Reuters report published
on Sunday.             
    The MOF said the decision not to cut the issuance of 30- and
40-year JGBs reflects demand from market players.
    Because short-term JGB yields are negative due to the Bank
of Japan's negative interest rates policy, many domestic
investors want to buy longer-dated bonds.             
    Despite the massive amount of debt, JGB yields have been
kept low by the Bank of Japan's aggressive buying for its
quantitative easing programme.
    For calendar 2018, the BOJ is on course to buy almost 90
trillion yen of JGBs in gross terms. 
    Here are the details of the MOF's JGB issuance plan for
2019:

Maturity   Planned issue   Frequency    Annual total
            per auction
              (trln yen)
--------------------------------------------------------------
  40-year     0.4  (0.4)    bi-monthly     2.4   (2.4)
  30-year     0.7  (0.7)     monthly       8.4   (8.4)
  20-year     0.9  (1.0)     monthly      10.8  (12.0)
  10-year     2.1  (2.2)     monthly      25.2  (26.4)
   5-year     1.9  (2.0)     monthly      22.8  (24.0)
   2-year     2.0  (2.1)     monthly      24.0  (25.2)
Infl-linked   0.4  (0.4)    quarterly      1.6   (1.6)
*Liquidity      --              --        12.6  (12.6)
   1-yr TBs   1.8  (1.8)     monthly      21.6  (21.6)
---------------------------------------------------------------
    Total                                129.4 (134.2)
    
    *In liquidity enhancing auctions, the Ministry of Finance
issues additional amounts of existing JGB issues to improve
their market liquidity.     
   ($1 = 111.79 yen)

 (Reporting by Hideyuki Sano)
  
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