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Key Points of the 112nd Meeting of JGB Market Special Participants


Date and Time: Tuesday, December 11, 2024, 4:00 p.m. - 4:50 p.m.
Location: Special Conference Room 3 at the Ministry of Finance
1. JGB Issuance Plan for FY2025

OPINIONS FROM THE PARTICIPANTS

• There was a consensus that there has been no change in their opinions since last meeting regarding market trends such as tight supply-demand situation for 3-month T-bills and room for the increase and decrease in issuance amount of JGBs by maturity.
• Regarding 40-Year Bonds, some participants expressed that the reduction of 0.2 trillion yen per auction would be enough to reduce from April 2025,although it is possible to reduce it by 0.1 trillion yen per auction from January 2025. Others suggested there was little urgency of the reduction and it would be enough from April 2025.
• Regarding the Liquidity Enhancement Auctions, there were views that the issuance amount of JGBs with the remaining maturity of 15.5 to 39 years could be increased by, for example, returning the issuance amount per time to 0.5 trillion yen in case of the reduction of super long-term bonds. In addition, some participants suggested that it was also possible to increase the issuance amount of JGBs with the remaining maturity of 1 to 5 years.

 

2. Issuance Size and Buy-Back Amount of Inflation-Indexed Bonds in the January-March 2025 Quarter

DEBT MANAGEMENT OFFICE’S PROPOSAL

• It was proposed to set an issuance size per auction (conducted once a quarter) at 250 billion yen and to conduct a Buy-back Auction of 20 billion yen each month, as is currently the case.

 

OPINIONS FROM THE PARTICIPANTS

• Since October, the breakeven inflation rate has remained stable, but in light of the fact that it has been undervalued from economic fundamentals, almost all participants expressed support for the proposal, saying that it would be appropriate to maintain the current treatment. A small number of participants expressed the opinion that they would like to see an increase in the amount of Buy-back in order to prepare for a future reduction in the Bank of Japan's purchase amount.

 

3. Issuance Size of Liquidity Enhancement Auctions in the January-March 2025 Quarter

DEBT MANAGEMENT OFFICE’S PROPOSAL

• Tap issuances of 500 billion yen for JGBs with remaining maturities of 1 to 5 years in odd-numbered months (January and March), 650 billion yen for JGBs with remaining maturities of 5 to 15.5 years monthly, and 400 billion yen for JGBs with remaining maturities of 15.5 to 39 years in even-numbered months (February) were proposed, as is currently the case.

 

OPINIONS FROM THE PARTICIPANTS

• As there have been no significant changes since the September meeting, all participants expressed their support for the proposal to maintain the current treatment. In addition, regarding the CTD, although the outstanding amount in the market was increasing due to additional issuance through Liquidity Enhancement Auctions, etc., it was suggested that a certain issuance amount should be maintained.

 
4. Basic Product Features (Draft) of the New Floating-rate JGBs to be issued

DEBT MANAGEMENT OFFICE’S PROPOSAL

• Regarding the product features, it was proposed to basically follow the “Basic Product Features (Draft) of New Floating-rate JGBs on page 26 of today's presentation.

 

OPINIONS FROM THE PARTICIPANTS

• There was a consensus to support the proposal. Participants mainly expressed that while they recognized that the issuance maturity would be reconsidered at the timing of actual issuance, it would be desirable to issue by 2-Year Bonds based on current demand.