JPY Swaps: 10y well bid after weak 20y sale; JP issuers in USD bonds

Auction hammer
10y JGB yield rose above 0.5% after weak 20y sale, triggering good amount of paying in 10y swaps.

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  • 10y JGB yield above 0.5% after weak 20y sale

  • 10y well bid; 2s/10s steeper

  • New issues


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10y JGB yield above 0.5% after weak 20y sale

JGB future was marginally lower at the open, but dipped by 20-ticks in mid-morning domestic trading. The selloff continued after lunch break after weak demand at the auction.


Earlier today, the MOF sold JPY1.1991rn worth of its JPY1.2trn 20-year 1.4% JGBs (Number 183R) at tender. The auction drew bids worth 3.05 times, down from 3.36 times last month. Average yield was 1.306%. The tail widened from 0.02 last month to 0.13.


Dealers said the market was watching closely this auction after the selloff in January, and that the results were very disappointing.


JGB future closed the day 22-ticks lower at 146.43, and the yield on the benchmark 10-year JGB was marginally higher at 0.502%.



10y well bid; 2s/10s steeper

10-year swaps were better bid in the morning when it traded 0.5-0.75bp higher. Weak demand at the 20-year auction, as well as 10-year JGB yield shooting above 0.5%, then triggered good amount of paying there. A trader reported paying at up to 0.8775% in mid-morning Tokyo trading, steepening 2s/10s swaps by a basis point intraday before being marked 0.75bp steeper at 66.5bps at time of writing.


7-year has been slightly better bid, and has been traded in a tight range around 0.5bp higher of 0.635%, leaving 7s/10s swaps unchanged at 21.25bps.



New issues

  • Mitsubishi HC Finance America LLC is due to price a 10-year USD fixed-rate USD 144A/Reg S bonds at +185bps area. Leads are BofA, Citigroup, JPM and MS.


  • Mizuho Financial Group has launched a 3-tranche USD bond deal as follows:


    • May 27, 2029 6.25NC5.25 fixed-to-fixed at +165bps area.

    • May 27, 2031 8.25NC7.25 fixed-to-fixed at +180bps area.

    • May 27, 2034 11.25NC10.25 fixed-to-fixed at +195bps area.


    Final pricing may be today. Leads are Mizuho and BofA.


  • Resona Holdings Inc issued JPY20bn in 0.629%, March 1, 2028 bonds.