PREVIEW: The Japanese Ministry of......>

JGBS AUCTION: PREVIEW: 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#1-11, #17-61 & #151-167 will be on offer. The previous enhanced

liquidity auction covering these maturities was held on April 11. The auction

saw Y500bn offered and was covered 2.847x at an average spread of -0.002%, and a

high spread of 0.000% with 10.6331% of the bids allotted at the high spread.

Takedown was dominated by JB#153, which accounted for ~Y223bn of the amount

allotted.

- The JGB curve looks very flat at present, with 10-Year yields trading in the

region of -0.12%. Worth remembering that the latest round of 10-Year JGB supply

was not well received.

- The long-end of the curve will face a couple of challenges during the reminder

of the week; firstly this auction, while Friday will see the first round of

5-25+ Year Rinban operations since the BoJ reduced the frequency of operations

for 10-25 & 25+ year paper in its June plans.

- Results due at 0435BST/1235JST.