JGBS AUCTION: The Japanese Ministry....>

JGBS AUCTION: JGBS AUCTION: The Japanese Ministry of Finance will today auction

Y400bln of 15.5-39 Year JGB's in an enhanced liquidity auction.

- The previous enhanced liquidity auction in this maturity was held on December

19. The auction was covered 2.82x at an average spread of -0.007%, and a high

spread of -0.006% with 81.6766% bids allotted at the high yield.

- The biggest takedowns at the previous auction were in the 30-Year sector: *

30-Year #23 for 56.4bln, 30-Year #36 for Y50.0bln, 30-Year #51 for Y35.8bln,

30-Year #55 for Y28.0bln * 40 Year #9 for Y20.6bln

- Japanese lifers focus on maturities of 30-Y+, and tend to be attracted to

yields over 0.80% in the zone. Benchmark paper is currently at 0.785%, with none

of the off the run issues >0.80%. A similar story is apparent in the 40-Y space,

with none of the bonds on issue sitting above the lifers 1.00% preference.

- On a z-score basis the lines maturing between Dec '44 and Mar 52 are generally

sitting higher than other bonds eligible for today's operation, and it is also

worth noting that the MoF has reduced issuance plans for the super long end in

2018, which could stir extra demand at this offering.