Bloomberg News

Japan’s Banks, Insurers Ready to Buy More New Bonds, MOF Says

October 14, 2011

??Oct. 14 (Bloomberg) -- Japan’s institutional investors say the market can absorb additional government debt this fiscal year as the government looks for ways to finance earthquake reconstruction, according to a Ministry of Finance official. ??Most of the participants, which include life insurance companies and banks, expect the government to sell more debt maturing in 1, 2, 5 and 10 years, the official told reporters today, after meeting with the institutional investors. They expect 100 billion yen ($1.3 billion) to 200 billion yen will be added to each monthly auction of those maturities, said the official, who spoke on condition of anonymity. ??Some investors indicated they have room to buy more super long-term bonds, such as 20-year debt, according to the official. ??The gathering follows a ministry meeting yesterday with the 25 primary dealers, who are obliged to bid at the government’s sales. The dealers said they expect the government will issue about 2 trillion yen of extra debt this year. ??The finance ministry is gauging demand for bonds as it compiles its third extra budget for the year started April 1 to support an economy recovering from a record quake on March 11. The ministry announced in December a plan to sell record 144.9 trillion yen of debt during fiscal 2011. ??Japan’s 10-year bond yield fell half a basis point to 1.015 percent today, at Japan Bond Trading Co., the nation’s largest interdealer debt broker.

--Editor: Rocky Swift, Dave McCombs

To contact the reporter on this story: Monami Yui in Tokyo at myui1@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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