Bloomberg News

Japan’s Bonds Drop for 5th Day on Rising Stocks, 30-Year Sale

October 13, 2011

Oct. 13 (Bloomberg) -- Japan’s 10-year bonds declined for a fifth day, the longest slide in three months, as advancing stocks sapped demand for the relative safety of government debt.

Thirty-year yields climbed after the Ministry of Finance sold 638 billion-yen ($8.28 billion) of the securities, drawing bids valued at 3.27 times the amount on offer, the lowest ratio since June. Bond transactions started more than three hours late due to system problems, according to Japan Bond Trading Co.

“Considering that risk aversion is easing globally and the Nikkei 225 is holding firm, it’s natural that bonds are weighed on,” said Akitsugu Bandou, a senior economist in Tokyo at Okasan Securities Co., one of the 25 primary dealers obliged to bid at government debt sales. “In general, 30-year yields below 2 percent aren’t a level at which investors willingly buy.”

The benchmark 10-year yield increased two basis points, or 0.02 percentage points, to 1.015 percent as of 3:51 p.m. Tokyo time at Japan Bond Trading, the nation’s largest interdealer debt broker. The 1 percent security maturing in September 2021 declined 0.181 yen to 99.864 yen. The five-day drop in price was the longest losing streak since July 5.

Thirty-year yields rose 2.5 basis points to 1.935 percent, while 20-year rates climbed three basis points to 1.73 percent.

Ten-year bond futures for December delivery fell to as low as 142.13, the least since Sept. 1, before finishing the afternoon session at 142.24 at the Tokyo Stock Exchange. The Nikkei 225 Stock Average advanced 1 percent.

--Editors: Nate Hosoda, Jonathan Annells

To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Yumi Ikeda in Tokyo at yikeda4@bloomberg.net.

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.


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