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2025-09-17 11:55:11
[Demand for Japan's 20-year government bonds hits strongest subscription since 2020] Japan's 20-year government bonds issued on Wednesday recorded the strongest subscription demand since 2020. Despite the uncertainty in Japan's domestic politics, higher yields still attracted investors. The average bid-to-cover ratio for this auction reached 4.0, higher than the 3.09 in the previous issuance in August and higher than the average level of 3.2 in the past 12 months. This bond issuance is the first test of demand for ultra-long-term bonds since Japanese Prime Minister Shigeru Ishiba announced his resignation. His resignation paves the way for successors who may support more expansionary fiscal policies. The leadership change has cast a shadow over the prospects for the Bank of Japan's next interest rate hike and suppressed bond market investor sentiment. Although the spread between 5-year and 20-year government bonds has narrowed recently, Japan's yield curve remains the steepest among major developed markets, pushing up borrowing costs for the Japanese government, which already has the highest debt level among major economies.
