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

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

10-Year JGB's, issue #350. - The MOF last sold 10-Year debt on February 01, the

auction drew cover of 4.584 at an average yield of 0.088%, average price of

100.11, a high yield of 0.090%, low price of 100.09, with 72.9297% allotted at

the high yield.

- The BoJ upped its purchases of 5-10 Year JGBs on Feb 02 & conducted a fixed

rate purchase operation. Since then 10-Yr yields have eased by around 5bp, this

has left 10-Yr paper looking richer although BofAML suggest the sector looks

fair on the curve, noting that carry & roll for 10-Yr paper has edged higher.

- Nonetheless the curve is still flatter, which has clearly made the BoJ

uncomfortable as it trimmed its super-long (25+-Year) purchases yesterday.

- Headwinds for the auction include sub 0.05% b'mark 10-Yr yields, although the

line should be issued at a discount to b'hmark. It seems likely that an

alteration in settlement cycle will mean that the #350 is auctioned 4 times, as

opposed to the typical 3. It is also worth noting that #350 will not be eligible

for BoJ buying ops before Mar 19. Results due at 0345GMT/1245JST.