New 10-Year JGB Coupon Set at 28-Year High of 2.4 Pct

Tokyo, April 2 (Jiji Press)–Japan’s Finance Ministry on Thursday set the coupon on the April issue of 10-year Japanese government bonds auctioned the same day at 2.4 pct, the highest level in 28 years and eight months. The rate is up from 2.1 pct for the March 10-year JGB issue. The ministry decided on the hike due to the uptrend in long-term interest rates amid the yen’s depreciation and higher energy prices reflecting rising tensions in the Middle East. In interdealer bond trading Monday, the yield on the most recent issue of 10-year JGBs, regarded as Japan’s benchmark long-term interest rate, rose to as high as 2.390 pct, logging the highest level in 27 years. The ministry revises the coupon rate every three months in principle. The auction of the April 10-year JGB issue turned out to be sluggish, with the lowest accepted bid coming to 100.04, far lower than the market’s consensus estimate of around 100.44, and the tail, or the gap between the lowest and average successful bids, standing at 0.36, the largest since August 2024. The bid-to-cover ratio came to 2.57, lower than the average of 3.28 in the past year. “The auction came at a bad time,” an official at an asset management company said, noting that market players are increasingly believing that tensions over Iran will continue following a closely watched address by U.S. President Donald Trump on Wednesday. Trump said in the address that the United States will carry out severe attacks on Iran over the next two to three weeks, among other things. An official at a Japanese securities firm said, “With the entire financial market showing volatile movements, many investors apparently thought that they do not need to buy (the new JGB issue) under the current circumstances.” END [Copyright The Jiji Press, Ltd.]