Tokyo: Japanese bonds rose, completing the largest weekly gain in four months, on speculation banks with excess cash bought debt to secure stable returns.
Five-year notes on Friday had the first two-day advance in a month as the lowest Tokyo inter-bank offered rate, or Tibor, in almost four years reduced the cost to borrow money for debt purchases. Bonds also rose as Asian stocks slid from a 20-month high, boosting demand for the refuge of government debt.
"The sentiment has been, and will continue to be, positive for bonds," said Kazuhiko Sano, chief strategist in Tokyo at Citigroup Global Markets Japan Inc., a unit of New York-based Citigroup Inc. "The abundance of funds at banks means that their bond-buying potential is huge."
The yield on the 1.4 per cent security due March 2020 fell 4.5 basis points last week to 1.34 per cent, the lowest since March 24, at Japan Bond Trading Co., the nation's largest inter-dealer debt broker. That was the largest decline since the week ended December 18. A basis point is 0.01 percentage point.
Ten-year bond futures for June delivery rose 0.53 to 138.93 last week at the Tokyo Stock Exchange.
Five-year yields slid 3.5 basis points last week to 0.51 per cent after a 2.4 trillion yen (Dh95.26 billion) auction of the securities on April 15 drew the highest demand since April 2005.
