Japan fails to draw enough offers in debt purchase
The BoJ received 700.8 billion yen in offers for debt with a maturity
Tokyo: The Bank of Japan failed to attract enough offers to sell government notes yesterday, the first time that's happened since the central bank set up the programme in October 2010 to provide liquidity to the market.
The operation saw 480.5 billion yen (Dh21.92 billion) offers to sell debt maturing between one and two years, falling short of the BoJ's planned 600 billion yen purchase, the central bank said.
The BoJ received 700.8 billion yen in offers for debt with a maturity from two to three years, compared with its target to buy 100 billion yen.
Yields on benchmark ten-year securities slid to the lowest level since October 2010 after the sale.
Yesterday's result may increase pressure on BoJ Governor Masaaki Shirakawa to extend the length of maturity of debt the central bank purchases as it seeks to bolster the economy.
Difficulties
"As long as the low rates remain in the market, it may cause concerns that these shortfalls will continue," said Junko Nishioka, chief economist at RBS Securities Japan Ltd in Tokyo and a former central bank official.
Yesterday's operation "signals the difficulties created when the BoJ just buys government bonds to increase the size of its asset-purchase fund".
The yield on the ten-year note slid to 0.825 per cent yesterday. The two-year rate reached 0.095 per cent, below the upper range of the Bank of Japan's target for borrowing costs.
"Because brokerages have fewer securities on hand, it wasn't necessary for them to offer debt to BoJ with the yield at 0.1 per cent," said Toshiaki Terada, a researcher at Totan Research Co in Tokyo.
