Draft Shows Japan Plans to Reduce Issuance of Super-Long-Term Government Bonds

According to draft documents, Japan will reduce its scheduled government bond issuance for the 2025/2026 fiscal year by 500 billion yen from the initially planned total, bringing it down to 171.8 trillion yen. The issuance sizes for 20-year and 30-year government bonds will each be cut by 900 billion yen, to 11.1 trillion yen and 8.7 trillion yen, respectively. Japan will increase the issuance of two-year government bonds, as well as one-year and six-month discount treasury bills, by 600 billion yen each. The amount of government bonds offered to households will be increased by 500 billion yen, reaching a total of 5.1 trillion yen. The revised issuance plan will be submitted to primary dealers for discussion at a meeting on Friday. This move aims to ease market concerns over supply-demand imbalances, as recent auction demand has been weak and ultra-long bond yields surged to record highs last month. There are also considerations to repurchase some previously issued ultra-long-term Japanese government bonds at low interest rates to improve the supply-demand balance. (Jin10)