The Japanese Ministry of Finance (MOF) will....>

JGBS: The Japanese Ministry of Finance (MOF) will today sell Y1 trillion of

0.60% 20-Year JGB's, the first sale of issue #163.

- Japan last sold 20-Year paper on November 16, the auction drew an average

yield of 0.573% at 100.48, a high yield of 0.574% at 100.45 and was covered

4.131x, the sale size was slightly smaller at Y800 billion.

- The global flattening trend has affected the JGB curve since the previous

auction, as a result the 20-Year sector has richened on the curve, but still

looks cheaper than the super long end. 

- The auction should be supported by wider USD/JPY basis swaps, though levels

have narrowed recently they are still rich by historical standards. After the

MOF signalled last month that they would reduce super long issuance markets

pondered if the 20-Year sector could also be a casualty, but markets seem to

expect stable issuance. Long end BoJ purchases are heavily weighted to the end

of the month which means this issue will be eligible (settles Dec 20).

- The MOF will also sell 3-month bills today. Bill results due at

0335GMT/1235JST, 20-Year bond results due at 0345GMT/1245BST.