JPY Swaps: 10y bid as BOJ seen revising inflation forecast; KITC Samurais

BOJ building sign
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The JPY rates market slumped as an ex-BOJ official tipped a policy tweak this month. 10y swaps were bid as BOJ seen revising its inflation forecast.

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  • 10y bid as players prepare for inflation forecast revision

  • New issues - KITC 5-tranche Samurai, Toronto-Dominion Bank Euroyen bonds, NTT mega bond deal

 

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10y bid as players prepare for inflation forecast revision

JGB future was a tad weaker at the open. The selloff deepened soon after and the lead bond future was down by 47-ticks intraday before trimming losses near lunch break when it was marked 19-ticks lower of 147.42. The yield on the benchmark 10-year JGB was up almost a tick at its recent high of 0.475%.

 

A trader said the selloff in JPY rates, which was in contrast with the rally in the USD rates market in overnight trading, has been driven by players adjusting their positions after hawkish comments by an ex-BOJ official.

 

Hideo Hayakawa said in an interview on Thursday that he expected the central bank to make some kind of adjustment to YCC this month, “and if they don’t, it doesn’t make sense”. He said the BOJ must raise its inflation outlook for this fiscal year to match reality, while cutting the forecast for the following year to avoid fuelling normalisation calls by predicting inflation at or above 2% of three consecutive years.

 

Prior to his comments, several key banks had pushed back their timeline for a policy tweak. However, pricing in the rates market indicates that players are ready for a shift this month, or at least an upward revision of the inflation forecast.

 

10-year JPY swap rates, for example, traded above 0.7% this week. In domestic trading on Friday it went through up to 0.735% in earlier trading, up from yesterday’s close of 0.675%.

 

2s/10s swaps steepened up by 3.25bps intraday before being marked marginally steeper at just a tad above 61bps.

 

 

New issues – KITC 5-tranche Samurai, Toronto-Dominion Bank Euroyen bonds, NTT mega bond deal

  • Aichi Prefecture priced JPY10bn in 0.673%, July 28, 2033 bonds. Priced at JGBs + 21bps.

     

  • Air Water Inc raised JPY30bn via selling the following bonds:

     

    • JPY10bn in 0.840%, July 21, 2033.

    • JPY20bn in 0.405%, July 21, 2028 at JGBs + 27bps.

     

  • Credit Saison Co sold JPY10bn in 0.810%, July 31, 2030 bonds.

     

  • East Nippon Expressway  raised JPY60bn via selling the following bonds:

     

    • JPY10bn, 0.528%, July 31, 2030 at JGBs + 23bps.

    • JPY20bn, 0.106%, July 31, 2025 at JGBs + 15bps.

    • JPY30bn, 0.380%, July 31, 2028 at JGBs + 24.5bps.

     

  • Fukui Prefecture priced JPY5bn in 1.168%, July 24, 2043 bonds at JGBs + 5.5bps.

     

  • Fukuoka Prefecture issued JPY20bn in 1.168%, July 27, 2043 bonds. Priced at JGBs + 5.5bps.

     

  • Iwate Prefecture sold JPY5bn in 0.250%, July 25, 2028 bonds at JGBs + 11.5bps.

     

  • Kansai Electric Power Co issued JPY20bn in 0.900%, July 25, 2033 bonds.

     

  • Keisei Electric Railway sold JPY20bn worth of bonds in two equal tranches as follows:

     

    • 0.380%, July 20, 2028 at JGBs + 25bps.

    • 0.798%, July 20, 2033 at JGBs + 33bps.

       

    • Kintetsu Group raised JPY30bn via selling the following bonds:

       

      • JPY10bn, in 0.669%, July 21, 2028 at JGBs + 54bps.

      • JPY20bn, 0.669%, July 28, 2028.

       

    • Korea Investment and Securities Co Ltd issued the following Samurai bonds:

       

      • JPY1.1bn, 1.530%, July 22, 2025.

      • JPY1.6bn, 1.360%, January 21, 2025.

      • JPY5bn, 0.480%, July 22, 2025.

      • JPY6.3bn, 1.040%, July 22, 2024.

      • JPY6bn, 2.250%, July 21, 2026.

       

    • Kyushu Electric Power Co sold JPY15bn worth of bonds as follows:

       

      • JPY10bn, 1.430%, July 24, 2043.

      • JPY5bn, 1.170%, July 23, 2038.

       

    • Kyushu Railway issued JPY10bn in 0.768%, July 21, 2033 bonds at JGBs + 29bps.

       

    • Nippon Yusen Kk sold JPY20bn worth of bonds in two equal tranches as follows:

       

      • 0.439%, July 21, 2028.

      • 0.910%, July 21, 2033.

       

    • NTT Finance raised a massive JPY380bn via selling the following bonds:

       

      • JPY110bn, 0.395%, June 20, 2028 at JGBs + 26bps.

      • JPY190bn, 0.838%, June 20, 2033 at JGBs + 36bps.

      • JPY30bn, 0.230%, June 19, 2026.

      • JPY50bn, 0.648%, June 20, 2030 at JGBs + 35bps.

       

    • Shizuoka Prefecture priced JPY10bn in 1.163%, June 19, 2043 bonds at JGBs + 5bps.

       

    • Tokyo Metropolitan Government sold JPY20bn in 0.678%, June 20, 2033 bonds at JGBs + 20bps.

       

    • The Toronto-Dominion Bank priced JPY41.2bn worth of Euroyen bonds as follows:

       

      • JPY10.2bn, 0879%, July 25, 2028 at mid-swaps + 59bps.

      • JPY20bn, July 25, 2030 at mid-swaps + 62bps.

      • JPY11bn, July 25, 2033 at mid-swaps + 65bps.

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