PREVIEW: The Japanese MOF will today...>

JGBS AUCTION: PREVIEW: The Japanese MOF will today sell Y700bn of 30-Year JGB's

re-opening JB#66. The MOF last sold 30-Year debt on April 7, the auction drew

cover of 3.527x at an average yield of 0.426%, average price of 99.29, high

yield of 0.441%, low price of 98.90, with 28.6764% of bids allotted at the high

yield.

- The line last yields 0.56%, which is closer to the cheaper end of the YtD

range, than the richer end, in outright terms. This will please the BoJ, given

its desire to foster a steeper yield curve.

- In relative terms, the 5-/30-Year yield spread hovers just shy of YtD steeps,

after some flattening in March, with the 20-/30-/40-Year yield fly hovering

around the middle of its recent range i.e. that overserved since the start of

April.

- 30-Year swap spreads sit in the middle of the YtD range.

- The limited amount of Rinban ops covering this tenor and impending heavy JGB

supply schedule may weigh on demand at this particular auction.

- Results due at 0435BST/1235JST