Story from the Nikkei Asian Review doing the...>

JGBS: Story from the Nikkei Asian Review doing the rounds that the Japanese

Ministry of Finance will cap the amount of front loaded JGB issuance at Y55tln,

down around Y1tln from the FY2017 cap and denoting the first cut in front

loading since 2009.

- The report says that the practice of front loading bonds is no longer as

effective due to low interest rates not attracting investors.

- The size of the front loading programme has drastically risen since the BoJ

embarked on QQE in 2012, and has been increasingly used as a crutch as the YCC

programme reduced liquidity in the JGB market.

- The front loading programme allows the BoJ to smooth out bond issuance

fluctuations and raise more funds without issuing supplemental bonds in the

year. The move to reduce the cap, therefore, could increase speculation that a

change in the YCC programme could be on the cards allowing yields to rise and

meaning the BoJ could purchase less bonds.