Japan's Bonds Gain Most This Year as Banks Invest Excess Cash BusinessWeek
By Theresa Barraclough
April 17 (Bloomberg) -- 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 yesterday had the first two-day advance in a month as the lowest Tokyo interbank 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 percent security due March 2020 fell 4.5 basis points this week to 1.34 percent, the lowest since March 24, at Japan Bond Trading Co., the nation’s largest interdealer debt broker. That was the largest decline since the week ended Dec. 18. A basis point is 0.01 percentage point.
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