Bond investors likely to drop longer dated Japan debt for shorter dated

Tokyo

JAPAN'S international bond investors are likely to shift from the nation's longest-dated debt to shorter securities to take advantage of currency swap agreements that boost returns, according to Barclays plc.

Foreign investors sold bonds with tenors longer than 10 years in June as yields on the debt approached zero, said Naoya Oshikubo, a rates strategist at Barclays in Tokyo. Now they want short-term notes combined with cross-currency basis swaps that allow US dollar-based investors to borrow yen at a discount and turn negative yields positive, he said. An auction of 30-year bonds on Tuesday drew the weakest demand in a year.