BOJ’s Stash of Bonds Is Set to Shrink for First Time Since 2008

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(Bloomberg) -- Investors in Japans government bonds are likely to confront not only potential interest-rate hikes as a bearish factor but also a reduction in the central banks vast bond holdings as soon as next quarter..

The Bank of Japans gross purchases are estimated to fall below the amount of maturing debt in the July-September period for the first time in 16 years, according to a Bloomberg analysis of the central banks balance sheet..

The shortfall will be a modest 196 billion ($1.29 billion) but will increase in 2025 even if the central bank maintains its monthly debt buying at about 6 trillion as mentioned in its March policy statement..

If the BOJs purchase amounts across all tenors are at the lower end of the planned range, that would equal a reduction in monthly bond buying of about 1 trillion, said Naoya Hasegawa, a senior bond strategist at Okasan Securities Co., citing the summary of opinions from the BOJs March meeting..

Central bank chief Ueda was vague about the impact that the BOJs ownership has on the Japanese government bond market it currently holds 54% of outstanding debt..

Full story at mint | 

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