Japan's Finance Ministry Contemplates Mid-Year Bond Review Amid Market Support

Japan's Ministry of Finance is considering a mid-year review of its annual bond issuance plan following strong support from market participants. Meeting attendees favored the idea to improve predictability. The MOF aims to tackle debt oversupply and adjust bond types amidst fluctuating market conditions.

Japan's Ministry of Finance is poised to potentially implement a mid-year review of its annual bond issuance strategy, following considerable approval from bond market stakeholders in a recent meeting. This move, proposed by Mitsubishi UFJ Morgan Stanley Securities, aims to enhance prediction accuracy for future bond plans, according to a senior ministry representative.

Although specific plans are yet to be finalized, the ministry is contemplating executing these revisions around June in upcoming years. Traditionally, the ministry establishes its bond issuance plan every December for the following fiscal year but lacks regular review procedures. This discussion emerges after a noteworthy decrease in super-long Japanese government bonds (JGB) prompted a rare adjustment of the plan in June.

Amid an ongoing repricing of JGBs and yen depreciation due to potential debt oversupply, the MOF is expected to adjust its current plan to accommodate Prime Minister Sanae Takaichi's expansive fiscal package. Most meeting attendees suggested trimming sales of 30-year JGBs while increasing the issuance of shorter-term two, five, and 10-year JGBs to better suit market demands.

(With inputs from agencies.)