By Takaya Yamaguchi
Tokyo (Reuters) – Japan plans to buy certain very long -term state obligations issued in the past at low interest rates, two sources said on Monday, stressing the importance that Tokyo attaches to contain all sudden increase in bond yields.
This measurement comes while the government also intends, according to sources, to reduce emissions of very long -term bonds – such as those with maturities of 20, 30 or 40 years – after a sharp increase in yields last month.
The Ministry of Finance, which oversees the government debt emission plan, will make a final decision after meetings with bond market participants on June 20 and 23, sources said.
The repurchase of Japanese state bonds in the very long term (JGB) will require budget approval and should take some time, they added.
“The reduction of new JGB emissions in the very long term will probably not be enough to solve the problem of the excess offer, so it would be a step in the right direction,” said Mari Iwashita, strategist for rates at Nomura Securities.
The yield of the Japanese state obligation at 10 years is stable on Monday at 1.47%, while the yield of the obligation at 30 years decreases from three base points, to 2,889%.
JGB yields in the very long term reached record levels last month, due to the weakening of demand from traditional buyers such as life insurers, but also market worries in the face of increase in debt levels.
Japanese Prime Minister Shigeru Ishiba undergoes political pressures to reduce taxes and increase spending, policies that could increase the country’s already considerable public debt.
In response, the very long -term Japanese sovereign debt has been the subject of a strong sales movement and the yields of the JGB at 30 years reached a peak of 3.18% on May 21.
Sources have told Reuters that the Bank of Japan (BOJ) would probably maintain its current program to reduce obligations until March, but would consider slowing down the rate of reduction from April 2026
La Boj must present its new program at its next meeting on June 16 and 17.
(Takaya Yamaguchi report, with the contribution of Kevin Buckland and Makiko Yamazaki; Diana Mandia, edited by Blandine Hénault)
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