By Makiko Yamazaki
Japan's Ministry of Finance will forgo adjustments to the planned issuance of government bonds to the market for this fiscal year at a newly introduced mid-year review, after hearings with investors, a senior official said on Monday.
The first regular mid-year review of the government's bond issuance plan leaves unchanged the calendar-based market issuance amounts for coupon-bearing bonds across maturities, with the total issuance to stay at 168.5 trillion yen ($1.04 trillion).
The benchmark 10-year Japanese government bond (JGB) yield stood around 2.64% (JP10YTN=JBTC), having touched 2.8% in May, a level last seen in October 1996, amid concerns about global inflation driven by the Middle East conflict and Japan's fiscal expansion under Prime Minister Sanae Takaichi.
However, yields have stabilised in recent weeks, backed by steady demand at regular government bond auctions, giving the finance ministry only limited pressure from the market to revise its current issuance plan.
Japan decided to introduce regular mid-year assessments last year after a rare step in June to cut scheduled sales of super-long bonds from original issuance plans, formulated once a year, to ease concerns over market oversupply.
At a meeting on Friday with primary dealers, or financial institutions that act as market makers, some dealers urged the ministry to be wary of adjusting the planned issuance of bonds to temporary market fluctuations.
The ministry also held a separate meeting with bond investors on Monday, where many participants said supply-demand conditions have not deteriorated structurally to the point that a change in the issuance plan is necessary, the senior official told reporters after the meeting.
Taking various opinions across the market into account, the official said the ministry had decided to maintain the current issuance plan.
($1 = 161.8800 yen)