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

JGBS AUCTION: The Japanese Ministry of Finance (MOF) will today sell Y500bln of

0.90% 40-Year JGB's, a reopening of issue #10. The MOF last sold 40-Year debt on

November 28, the issue drew a low yield of 1.005% at 96.60, covered 3.001. As a

note 40-Year bonds are sold in a dutch style auction at 0.5bp yield intervals.

In the secondary market the issue currently yields 1.019%.

- After the MOF announcement late in 2017 that they would reduce super long JGB

issuance the curve has flattened, the reduction in purchases from the BoJ

reversed some of this move. While yields in the long end are higher than the

previous auction the curve has flattened. Though yield levels have come off

highs as the BoJ tapering theory loses some steam, some lingering concern as

evidences by elevated cover ratios at yesterday's BoJ ops could cast doubt on

the BoJ trade (buy cheap, sell to BoJ) and hit demand.

- At these yield levels (i.e. above 1.%) the 40-Year issue should attract demand

from life insurers and real money, however dealer/investor demand seems to be

centred on the 30-Year sector where the MOF will sell debt on January 18.

- Results due at 0345GMT/1245JST.