MNI BRIEF: BOJ To Continue Buying Cheapest 10-Yr JGBs At 0.25%

The Bank of Japan said on Friday it will continue to buy the No. 356 10-year Japanese government bonds without limit at a fixed rate of 0.25% for the time being, (See: MNI STATE OF PLAY: BOJ's Kuroda Makes It Clear On Yen, Yields).

The decision is aimed at preventing JGBs with a remaining life of less than 10-year from rising, which would distort the yield curve, although the BOJ continues to cap the benchmark 10-year bonds at 0.25%. The BOJ also announced it will relax the terms and conditions for the Securities Lending Facility of the Cheapest-to-Deliver Issues.

“The Bank of Japan decided to implement the following measures concerning the Securities Lending Facility (SLF) of 10-year JGBs No. 356, No. 357, and No. 358 for the time being, in order to ensure stability in the market by easing excessive tightening in supply and demand of Japanese government securities in the repo market,” the BOJ said.