Demand For 40-Year JGB Auction Falls To Lowest Since July

Demand for Japan’s 40-year government bond auction on Wednesday fell to its lowest level since July as so-called ultra-long bonds sold off this month.

The bid-to-cover ratio, a measure of demand that measures total bids compared to the number of securities on offer, fell to 2.2 from 2.9 at the last sale in March.

The Ministry of Finance sold about 500 billion yen ($3.46 billion) of bonds at Wednesday’s auction.

The 40-year JGB yield surged to a record 3.675% last week as concerns about debt burdens in Japan and other developed markets such as the United States led to a sell-off in the longest-dated bonds.

Ultra-long JGBs lack support from traditional buyers such as life insurers and pension funds, which have been scaling back purchases.

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