JPY Swaps: Light 10y bid steepens 2s/10s; 2-way 5y flow after mid-day

Japan Street Night
JPY Swaps have generally been bid despite late-day gains in the cash bond market. 5y saw some 2-way interest after lunch break.

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  • JGB future trims losses amid worries in China

  • Light 10y bid; 2-way 5y interest after mid-day

  • New issues


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JGB future trims losses amid worries in China

JGB was weaker in the morning session, tracking losses in the US treasury market on Friday.


US treasuries fell on Friday as traders continued to price in aggressive US Fed tightening following couple of hawkish comments from the official there.


The lead bond future trimmed losses after lunch break, and was even up by a few-ticks, as the Chinese central bank keeping the 1- and 5-year loan prime rate renewed fears over further deterioration in the property sector in China. Reports about worsening Covid situation in China have also dampened selling interest in JPY rates.


The lead bond future finally closed the day 3-ticks higher at 149.41, and the yield on the benchmark 10-year JGB was a tad lower at 0.242%.



Light 10y bid; 2-way 5y interest after mid-day

Domestically, JGB buyback by the BOJ offered no surprise to the market, offering no trading direction to market participants. A dealer noticed light trade flow across the maturity spectrum, and blamed the lack of interest to a holiday-shortened week in Japan this week, as the market will be closed on Wednesday for a bank holiday.


The source reported paying in 10-year at between 0.5225% and 0.53%, up from Friday’s close of 0.52% and steepening 2s/10s swaps marginally to 42bps, despite paying in 2-year at up to about 0.5bp higher of 0.105%.


5-year, on the other hand, was paid up briefly at 0.2425% around mid-day before 2-way interest took over in the afternoon when it traded around previous close. 2s/5s swaps were 0.25bp flatter at 13.5bps at time of writing.



New issues

  • East Nippon Expressway raised JPY96bn via selling the following bonds:


    • JPY16bn, 0.374%, December 20, 2029 at JGBs + 23bps.

    • JPY20bn, 0.499%, November 30, 2032 at JGBs + 25.5bps.

    • JPY60bn, 0.320%, September 17, 2027 at JGBs + 25bps.


  • Fukuoka Prefecture sold JPY5bn in 0.563%, November 28, 2042 bonds at JGBs + 24bps.


  • Hokuriku Electric Power issued the following bonds:


    • JPY10.6bn, 1.400%, November 25, 2042.

    • JPY15.3bn, 1.000%, November 25, 2032.

    • JPY18.5bn, 0.580%, April 25, 2028.


  • JFM raised JPY11bn via selling the following bonds:


    • JPY3bn, 0.627%, March 27, 2034.

    • JPY4bn, 0.286%, November 28, 2029.

    • JPY4bn, 0.393%, November 27, 2031.


  • Kyushu Electric Power Co issued JPY26bn in 0.450%, November 25, 2025 bonds.


  • Kyushu Railway sold JPY25bn worth of bonds as follows:


    • JPY10bn, 0.335%, November 25, 2027 at JGBs + 27bps.

    • JPY10bn, 0.649%, November 25, 2032 at JGBs + 40.5bps.

    • JPY5bn, 0.220%, November 25, 2025 at JGBs + 24.9bps.


  • Minebea Mitsumi issued JPY25bn in 0.420%, November 25, 2027 bonds.


  • Toyota Tsusho priced JPY15bn in 0.684%, November 25, 2032 bonds at JGBs + 44bps.


  • Ube Corp raised JPY10bn via selling bonds in two equal tranches as follows:


    • 0.530%, November 25, 2027 at JGBs + 45bps.

    • 0.970%, November 25, 2032.


  • West Japan Railway priced JPY10bn in 0.629%, November 25, 2032 bonds at JGBs + 38.5bps.


  • Yokohama City issued JPY10bn in 0.499%, December 30, 2032 bonds.