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Doubts on Japan 50-year bond
David Turner from Tokyo
3/12/2006
A senior official at Japan's finance ministry lately played down suggestions from a top government adviser that Japan should prepare to issue 50-year bonds, highlighting the disagreement in Japan over whether the market is ready for such bonds.
"We would prefer to wait until the 30-year becomes a more liquid and larger market and establishes itself better," Chikahisa Sumi, director of the ministry's market division, told the Financial Times.
Mr Sumi's department is in charge of Japan's large debt issuance.
He was responding to the recent suggestion by Masaaki Honma, professor of economics at Osaka University and head of a government panel on debt issuance, that "we have to consider the possibility of such sales".
Last year, France became the first of the Group of Seven (G7) industrialised nations to sell 50-year bonds in recent times and to tap into the rising demand for debt with maturities of more than 30 years. The UK has also issued them.
John Richards, strategist at Barclays Capital in Tokyo, said: "I can't imagine they would want to drain the long end of liquidity" by "coming out with 50-years".
Mr Richards said liquidity in 30-year bonds was still low, as they tended to be snapped up and then kept by organisations wanting to manage long-term liabilities.
But Mr Sumi continues to agree that a 50-year bond might one day be feasible. Last June he told the FT that the department "might" issue 50-year bonds "when we are confident that the 30-year market is quite liquid".
Mr Sumi said: "My feeling has not changed much."
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