JPY Swaps: Light 10y bid after tighter trade deficit and weak Rinban; KRR bonds

Sad wfh trader 11 Oct 2021
Tighter trade deficit and weak Rinban have backed some light paying in 10y JPY swaps after lunch break. KRR has priced its 6-tranche yen bond deal.

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  • Selloff deepens after Rinban operations

  • Light 10y bid after earlier offers; Flatter from 10y

  • New issues – KKR priced JPY61.5bn worth of bonds


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Selloff deepens after Rinban operations

JGB future has followed the USD rates market lower, which was in turn driven by selling of safe-haven assets on the back of better risk appetite as US President Joe Biden was positive about the ability to reach a US debt-ceiling deal. Domestic data has also contributed to the move.  


Official data released at the open showed that Japan’s traded deficit in April unexpectedly tightened to JPY432.4bn. Economists had expected it to widened from the revised JPY755.1bn in May to JPY600bn.


Selling of JPY rates then intensified after lunch break due to weak demand at the BOJ Rinban operations earlier today.  


In mid-afternoon Tokyo trading the lead bond future was down 24-ticks at 148.88, and the yield on the benchmark 10-year JGB was 1.5bps higher at 0.38%.



Light 10y bid after earlier offers; Flatter from 10y

The reaction in the swap market has not been as wild as in the cash market. Indeed, some players took a deeper at the trade data, and the bigger-than-expected contraction in imports, which was the first contraction in over two years, indicated a dampened purchasing sentiment in the country. This has prompted some light receiving in 10-year in earlier trading when it traded about 0.75bp lower of 0.53%. 10-year then traded up to 1bp higher of 0.5475% after lunch break, steepening 2s/10s swaps by 1.25bps to 47.75bps while flattening 10s/20s swaps by 0.75bp to 37.75bps.



New issues – KKR priced JPY61.5bn worth of bonds

  • Hokuriku Electric Power issued JPY5bn in 0.9%, May 25, 2033 bonds.


  • JEHDR raised JPY40bn via selling the following bonds:


    • JPY20bn, 0.201%, May 26, 2027at JGBs + 20.5bps.

    • JPY10bn, 0.934%, May 28, 2038 at JGBs + 21.5bps.

    • JPY10bn, 1.06%, May 26, 2042 at JGBs + 12.6bps.


  • JHF sold JPY20bn in 1%, May 29, 2043 bonds.


  • KKR Group issued JPY61.5bn worth of 144A/Reg S bonds as follows:


    • JPY44.7bn, 1.428%, May 25, 2028 at mid-swaps + 120bps.

    • JPY1.8bn, 1.614%, May 24, 2030 at mid-swaps + 125bps.

    • JPY1.5bn, 1.939%, May 25, 2033 at mid-swaps + 140bps.

    • JPY3bn, 2.312%, May 25, 2038 at mid-swaps + 155bps.

    • JPY4.5bn, 2.574%, May 22, 2043 at mid-swaps + 165bps.

    • JPY6bn, 2.747%, May 23, 2053 at mid-swaps + 175bps.


    Leads are BofA, KKR Capital Markets, Mizuho, Morgan Stanley and SMBC Nikko.


  • Tokyo Metropolitan Government priced JPY20bn in 0.657%, March 18, 2033 bonds at JGBs + 28bps.