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Current Trends on JGB Investment and Opinions on the Formulation of the JGB Issuance Plan for FY2025
OPINIONS FROM THE PARTICIPANTS
• Regarding 40-Year Bonds, a dominant opinion was that it was appropriate to reduce the issuance size because the demand was declining due to the progress to meet the regulatory requirements of life insurance companies. As for the timing of the reduction, although some participants insisted the reduction in the issuance within FY2024, a dominant opinion was that the reduction from FY2025 would be appropriate. As for 30-Year Bonds, although certain demand was expected compared to 40-Year Bonds, a dominant opinion was the reduction would be appropriate.
• In the long-term and medium-term bonds, there was a general consensus that it was possible to increase the issuance size of these bonds, with an expectation for the additional investment demand from depository institutions.
• A dominant opinion was that it was possible to increase the issuance size of short-term bonds, particularly for 3-month T-bills, based on the strong demand. There were also some opinions that current supply-demand situation for 3-month T-bills could be improved by increasing the issuance of TBs for 6-month T-bills and shifting the issuance of FBs to 3-month T-bills.
• Regarding the Liquidity Enhancement Auctions, there were views that if the issuance amount of 30-Year and 40-Year Bonds were to be reduced, the issuance of JGBs with the remaining maturity of 15.5 to 39 years could be increased. In addition, some participants requested an increase of the tap issuance of JGBs with remaining maturities of 5 to 15.5 years and 1to 5 years in order to secure liquidity, as the outstanding amount in circulation of some issues was small.
• There were comments that it was appropriate to maintain the current issuance amount of Inflation-Indexed Bonds, and to reduce that of Japan Climate Transition Bonds.
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