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PREVIEW: Liquidity Enhancement Auction For OTR 1- to 5-Years JGBs

JGBS AUCTION

The Japanese Ministry of Finance (MOF) will today sell Y500bn of JGBs with 1-5 years until maturity in a liquidity enhancement auction. JB#70-101, #140-156, #334-350 & #436-448 will be on offer.

  • The previous liquidity enhancement auction covering these maturities was held on 9 March 2023. The auction was covered 3.205x at an average spread of -0.003%, a high spread of 0.000%, with 96.7889% of the bids allotted at the high spread.
  • Although this event offers an opportunity to access liquidity, and therefore will likely generate at least a baseline level of demand, the early March offering suggested only a moderate level of demand for this part of the curve.
  • However, it's worth noting that the previous auction took place at a time when bond prices were at their highest for the year, during the height of the U.S. banking crisis, and after the Bank of Japan had kept its monetary policy settings unchanged. Given the subsequent drop in bond prices, it's possible that we'll see a different outcome this time around.
  • Results due at 0435BST/1235JST.

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