PREVIEW: Liquidity Enhancement Auction For 15.5- To 39-Year JGBs

The Japanese Ministry of Finance (MOF) will today sell Y500bn of JGBs with 15.5-39 Years until maturity in a liquidity enhancement auction. JB#1-13, #27-71 & #161-177 will be on offer.

• The previous enhanced liquidity auction covering these maturities was held on August 19. The auction saw Y498.8bn issued and was covered 2.163x at an average spread of +0.004%, and a high spread of +0.008%, with 78.8235% of the bids allotted at the high spread.
• The August auction saw JB#30, #31 & #33 account for a cumulative ~Y110bn of the takedown, exhibiting the usual bunching of demand witnessed, with some pockets of demand also observed in individual lines elsewhere across the spectrum.
• Note that the recent round of cheapening witnessed in global fixed income markets has result in generally soft bid/cover ratios when it comes to the recent rounds of JGB supply, with the pricing metrics witnessed at those same auctions somewhat mixed. Friday's stabilisation in U.S. Tsys may help demand out a little today, although the uncertainty evident re: JGB issuance in the coming months/next FY may detract from bidding.
• Results due at 0435BST/1235JST.