PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y900bn of 20-Year JGB's

re-opening JB#170. The MOF last sold 20-Year debt on October 24, the auction

drew cover of 3.906x at an average yield of 0.245%, average price of 101.04,

high yield of 0.249%, low price of 100.95, with 57.2532% of bids allotted at the

high yield.

- It is unlikely that the line will be included in the next round of BoJ Rinban

operations (as is the case now), but resolute dealer demand for 20-Year paper in

the primary stage will likely offset worries on that front.

- The line currently yields 0.282%, after operating in a ~0.20-0.34% range over

the past month. The line has a more attractive carry & roll dynamic than longer

dated benchmarks, albeit slightly less attractive than 10-Year paper. 20-Year

paper sits at the cheaper end of the recent range (12-Months) vs. swaps. The

10-/20-/30-Year JGB fly sits just off its 12-Month lows.

- Daiwa point to "decent" short covering requirements, which could prove

supportive.

- Results due at 0335GMT/1235JST.