Japanese Ministry Of Finance Considers Issuance Of 40 Year JGB

The Japanese Ministry of Finance has started considering the issuance of 40 Year JGB in the second half of fiscal year 2007, according to the Nikkei newspaper. Market participants expect the good demand from overseas investors. When 40 year JGB

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The Japanese Ministry of Finance has started considering the issuance of 40-Year JGB in the second half of fiscal year 2007, according to the Nikkei newspaper. Market participants expect the good demand from overseas investors.

When 40-year JGB is issued, MOF firstly pre-hears the demand from institutional investors, and fixes the issuing conditions. It is more likely that the 40-year JGB will be issued on ad-hoc basis, as this is not planned to be included in the initial government bond issuance plan drafted by MOF for fiscal 2007.

MOF is planning to issue the 40-year JGB in an amount of several tens of billions. It is also considering the issuance of the 50-year JGB depending on the investors’ demand.

The total amount of the government bonds issued in fiscal year 2006 is budgeted to be 165.4 trillion yen. It is expected to fall next fiscal year, but there will be a continuous issuance in large amount. MOF intends to issue the super long end JGB with relatively low coupon, in order to keep the cost at the low level. There is the increasing demand for long end fixed income products denominated in yen among life insurance company and pension plans. So market participants assume that JGB with the maturities of 40 or 50-years will be accepted in both global and domestic market.

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