By Tyler Durden
Just days after raising its economic outlook, Japan’s ministry of finance announced on Thursday that for the first time since 1998 it would slash government bond issuance in fiscal 2017 which starts on April 1. The MOF plans to issue Y154.0 trillion in JGBs in coming fiscal year, down 5% from an initial Y162.2 trillion for the current fiscal year, as a result of sliding demand for debt amid continued very low to negative interest rates.
The JGB plans also feature a rare year-on-year cut in the issuance of 10-year JGBs: such a reduction is the first since fiscal 1998.
According to MarketNews, the government is also trying to reduce its dependence on debt issuance for financing a budget deficit for the third consecutive year. In fiscal 2017, it plans to meet rising social security and other costs by using funds set aside for currency market operations in the face of slow tax revenue growth.
Looking to capitalize on still record low , and in many cases negative, rates around the curve, the MOF will reduce the issuance of 20-, 10-, 5-, 2-, and 1-year debt while raising the share of 40-year bonds to take advantage of continued low bond …read more