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

JGBS AUCTION: The Japanese Ministry of Finance will today auction Y500bln of

15.5-39 Year JGB's in an enhanced liquidity auction.

- The previous enhanced liquidity auction covering these maturities was held on

February 16. The auction was covered 2.80x at an average spread of -0.007%, and

a high spread of -0.006% with 66.3730% bids allotted at the high spread.

- The largest takedowns at the previous auction were: 30-Year #36 for 58.3bln,

20-Year #150 for 55.5bln, 20-Year #155 for Y55.5bln 30-Year #32 for Y43.2bln &

40 Year #9 for Y34.5bln.

- Japanese lifers focus on maturities of 30-Years+, and tend to be attracted to

yields over 0.80% in the zone. Benchmark paper is currently yielding 0.717%,

with none of the off the run issues yielding over 0.80%. A similar story is

apparent in the 40-Year space, with none of the bonds on issue sitting above

lifers' 1.00% preference. This reflects the flat Japanese yield curve

environment that the BoJ has been trying so hard to stave off. As a reminder the

BoJ trimmed the size of its 25+ Year Rinban ops by Y10bln to Y70bln back on Feb

28.