EM ASIA CREDIT: MNI EM Credit Market Update - Asia

The 20-year JGB auction delivered mixed results across key metrics. The low price underperformed dealer forecasts, which were set at 98.85 according to a Bloomberg poll. Moreover, the cover ratio declined to 3.0853 from 3.1462x in the previous auction. The auction tail did, however, shorten to 0.13 from 0.18. 

• As noted in the auction preview, today’s offering featured an outright yield near its cycle high, 10bps above last month’s level.  
• Moreover, the 10/20 yield curve remained near its recent high, its steepest since 1999.
• This result aligns with the mixed performance observed in the 30-year JGB auction earlier this month.
• Post-auction, the 20-year JGB is little changed. 

The Japanese Ministry of Finance (MOF) sells Y606.1bn 20-Year JGBs:

• Average Yield: 2.581% (prev. 2.482%)
• Average Price: 98.93 (prev. 100.23)
• High Yield: 2.591% (prev. 2.496%)
• Low price: 98.80 (prev. 100.05)
• % Allotted At High Yield: 65.3666% (prev. 20.3084%)
• Bid/Cover: 3.0853x (prev. 3.1462x)

The Japanese Ministry of Finance (MoF) will today sell Y800bn of 20-Year JGBs. The MoF last sold 20-year debt on 10 July 2025.

• Today’s 20-year JGB auction offers an outright yield near its cycle high, 10bps above last month’s level.
• Moreover, the 10/20 yield curve remains near its recent high, its steepest since 1999.
• The 20-year JGB is at a similar valuation to last month in terms of the 10/20/30 butterfly.
• On the other hand, the auction comes amid a slight improvement in sentiment toward long-term global bonds.
• Given these dynamics, it remains to be seen whether today’s supply can generate some positive momentum for JGB auctions or if market caution will weigh on demand.
• Results are due at 0435 GMT / 1235 JT.