The Japanese Ministry of Finance.......>

JGBS AUCTION: The Japanese Ministry of Finance (MOF) will today sell Y2.3tln of

0.10% 10-Year bonds, the second reopening of issue #347. The size and coupon are

unchanged from the previous auction.

- At the last sale of these securities the issue drew an average yield of 0.079%

at 100.20, a high yield of 0.080% at 100.19, covered 4.77x.

- The issue currently yields 0.073% in the secondary market, down 0.2bp today.

-  Sources note the auction is expected to be smoothly absorbed as

short-covering is expected, especially on the back of selling yesterday.

- The BoJ have repeatedly affirmed their commitment to YCC and their actions

earlier in July indicate that the yield ceiling is around 0.10%. Therefore the

risk of loss in limited in the sector.

- Bank of America note that "Amid low volatility, demand has been concentrated

in the 15yr-20yr sector, where carry and rolldown is favorable and the BoJ's

purchasing operations are solid. As a result, this sector is rich on the curve,

but the 10yr sector is close to neutral."

- Results due at 0445BST/1245JST.