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

JGBS AUCTION: The Japanese Ministry of Finance (MOF) will today auction Y1tln of

0.6% 20-Year JGB's, the initiation of series 162.

- The MOF last sold 20-Year bonds on August 22, the auction drew an average

yield of 0.550%, covered 4.51x with a 0.03 tail. The average bid/cover of the

past 12 auctions is 3.77, while the average tail is 0.11.  Last months auction

was the strongest demand in 3 years. In the secondary market the on the run

20-Year (161) yields 0.560%, up 1.3bp on the day.

- Yields declined recently amid geopolitical tensions, but Bank of America point

out that "the 20yr JGB has underperformed on the curve. As a result, this

maturity's richness has been resolved." The 20-Year sector also has the benefit

of a strong carry and roll down of 2.17, which was supportive at the last

auction. USD/JPY basis swaps have risen in the past month, the result of

diminished USD demand which makes JPY assets more expensive which could

negatively impact the auction.

- The MOF will also sell Y4.4tln of 3-month bills today; bill results due at

0435BST/1235JST, 20-Year results due at 0445BST/1245JST.