JPY Swaps: Future dives briefly on ruling party division talk; JGBi sale

JGB future dived briefly after a report about ruling party division talk. 10y was briefly bid before the JGBi auction.

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  • JGB future dives briefly on ruling party division talk

  • Light 10y bid before JGBi auction; 5y better bid

  • New issues


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JGB future dives briefly on ruling party division talk

JGB future opened firmer, tracking the gains in US treasuries after a strong 10-year auction. However, the upward momentum was not sustainable and the lead bond future erased all the earlier gains by mid-morning domestic trading.  


Dealers said the earlier selloff was linked to players preparing for the 10-year Inflation-Indexed JGBs auction, which was a reopening issue of the May 2022 issue. 10-year breakeven inflation rate had already fallen by more than 20bps since the BOJ surprised the market by doubling the 10-year year cap to 0.5% back in December.


The MOF finally sold JPY250bn worth of its JPY250bn 10-year 0.005% JGBi (Number 27R) at tender at a yield of -0.173%. The auction drew bids worth 3.06 times, down slightly from 3.28 times last month.


In mid-afternoon Tokyo trading the lead bond future dived abruptly by 38-ticks after a report from Bloomberg suggested that there would likely be division among the country’s ruling party if hawkish Hirohide Yamaguchi was to be appointed the next BOJ chief. JGB future settled 14-ticks lower at 146.69, and the yield on the benchmark 10-year JGB was unchanged at 0.49%.



Light 10y bid before JGBi auction; 5y better bid

10-year swaps traded in a tight range around yesterday’s close of 0.835% in early morning domestic trading although there were also a couple of trades at 0.865% prior to the auction. It was paid up again to 0.845% after the news from Bloomberg.


2s/10s swaps steepened up by 2.5bps to 65.75bps intraday.


5-year has been slightly better bid throughout the day and traded mostly around 0.5bp higher of 0.44%.



New issues

  • Fukushima Prefecture priced JPY10bn in 0.309%, February 24, 2028 bonds at JGBs + 13.5bps.


  • Hiroshima City issued JPY10bn in 0.740%, December 20, 2032 bonds. Priced at JGBs + 25bps.


  • Hokkaido Prefecture sold JPY20bn in 0.740%, February 28, 2033 bonds at JGBs + 25bps.


  • JEHDR issued JPY10bn in 1.325%, February 27, 2043 bonds.


  • JFM priced JPY20bn in 0.740%, February 28, 2033 bonds at JGBs + 25bps.


  • Kagome Co Ltd issued JPY1bn in 0.200%, February 21, 2024 bonds.


  • Kyoto City raised JPY20bn via selling bonds in two equal tranches as follows:


    • 0.294%, December 20, 2027 at JGBs + 12bps.

    • 0.740%, December 20, 2032 at JGBs + 25bps.


  • Mori Trust REIT sold JPY3bn in 0.790%, February 28, 2029 bonds.


  • Niigata Prefecture priced JPY20bn in 0.740%, December 20, 2032 bonds at JGBs + 25bps.


  • Sagamihara City issued JPY5bn in 0.720%, December 20, 2032 bonds. Priced at JGBs + 23bps.


  • Sompo Japan Ins JPY127bn in February 13, 2083 callables that pay 2.5% till the annual call at par in February 2033, then 3%. Priced at JGBs + 200bps.