Superlong JGB yields at 15-month high on supply worry; 2-yr auction sees fair demand

SYDNEY, June 30 (Reuters) - Superlong Japanese government bond (JGB) yields rose on Tuesday, weighed down by worries about a planned increase in debt issuance next month, with 20-, 30- and 40-year yields hitting their highest in 15 months.

The longest 40-year cash debt yield advanced as much as two basis points (bps) to 0.635%, a level unseen since late March, 2019.

The 30-year and the 20-year JGB yields gained as much as 1.5 bps each to 0.600% and 0.410%, respectively, their highest levels since early March last year.

The benchmark 10-year cash JGB yield added 1.5 bps to 0.025%.

At the shorter end of the market, the two-year yield slipped half a basis point to minus 0.150% after Tuesday’s 3 trillion yen ($28 billion) two-year debt auction attracted fair investor interest.

The auction’s bid-to-cover ratio, a gauge of demand, declined to 4.68 from 5.28 at the sale last month.

Key 10-year JGB futures dropped 0.19 point to 151.95, with a trading volume of 18,346 lots.

The Bank of Japan (BOJ) is due to announce its bond buying plan for July later in the day (0800 GMT).

“According to our survey, market players expect the BOJ to increase buying in maturities of up to 10 years by more than 50% but barely raise its buying on longer-dated bonds,” said Koichi Sugisaki, strategist at Morgan Stanley MUFG Securities.

Superlong JGB yields have risen steadily in the past few weeks, especially since BOJ Governor Haruhiko Kuroda said on June 16 that he did not think superlong yields had risen much, compared with those of global peers. ($1 = 107.6600 yen)

Reporting by Tomo Uetake; Editing by Himani Sarkar