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JGBS AUCTION
JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y1.0tn of 20-Year JGB's,
representing the opening of #JB166.
- The MOF last sold 20-Year debt on September 20, the auction drew cover of
4.032x at an average yield of 0.618%, average price of 97.91, high yield of
0.622%, low price of 97.85, with 13.0174% allotted at the high yield.
- The benchmark 20-Year yield has traded in a ~7.5bp range since the most recent
auction, last trading at 0.681%, ~2.0bp off the recent high.
- There will be continued interest in the sector after the BOJ trimmed the size
of its purchases of the 25+ Year JGBs back in Sep, culminating in it lowering
the upper & lower bounds for the size of its purchases in longer dated paper for
Oct, although most expect the Bank to leave the size of its 10-25 Year JGB
operations unch. for now (unless supply-demand conditions drastically alter).
- There appears to be short covering requirements in the sector, with relatively
attractive carry & roll adding an additional layer of support. That being said
the sector looks expensive vs. longer dated lines, on both z-spread & ASW terms.
- Results due at 0435BST/1235JST.
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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