Japan 5-Year JGBs Meet Firm Demand; Bond Futures Rise Briefly

     TOKYO (MNI) - The supply of the new 5-year Japanese government bonds

auctioned Thursday met firm demand, leading September 10-year bond futures to

rise briefly.

     After the results were released at 1245 JST (0345 GMT), September bond

futures rose to 150.68 from 150.66 traded before the results. But the gain was

quickly erased by profit-taking, sending bond futures slightly down to 150.65.

     At midday, September 10-year bond futures closed down 0.02 from Wednesday's

close at 150.66, after rising to 150.72 for the highest level since June 7.

     The tail stemming from the gap between the average and accepted lowest

prices stood at 0.01, unchanged from the previous auction in July. A smaller

number means that investor demand is stronger. 

     The Ministry of Finance sold Y1.8074 trillion of the 5-year bonds, with the

lowest accepted price of 100.88, matching 100.88 expected by market players.

     The new issue carries a coupon of 0.1%, unchanged from that for the current

5-year bonds.

     Bids totaled Y8.0563 trillion, making the bid-to-cover ratio 4.46, down

from 4.85 at the previous similar auction in July.

     JGB investors who bought the new 5-year bonds at the auction are expected

to try to sell them at higher prices to the Bank of Japan on Friday, when it

conducts outright bond buying operations.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com

[TOPICS: M$A$$$,M$J$$$,M$$FI$,MN$FI$]