Japan's super-long bonds rise after report of possible bond buybacks

TOKYO, June 10 (Reuters) - Japan's super-long government bond prices rose on Tuesday, after Reuters reported that the government is considering buying back some super-long-dated bonds in a move to contain rising yields.

The 20-year JGB yield JP20YTN=JBTC fell 2 basis points (bps) to 2.340% and the 30-year JGB yield JP30YTN=JBTC fell 3 bps to 2.88%.

Bond prices move in the opposite direction to yields.

Japan is considering buying back some super-long government bonds issued in the past at low interest rates, two sources with direct knowledge of the plan told Reuters.

"Although the finance ministry's bond issuance plans are still not clear, the report about bond buybacks is positive," said Naoya Hasegawa, chief bond strategist at Okasan Securities.

"It signals the ministry's willingness to improve demand for bonds with super-long maturities," Hasegawa said.

The latest report came as the market awaited details of the ministry's bond sale plans after Reuters reported last month that the ministry is considering a cut in the sale of super-long bonds.

The Ministry of Finance, which oversees the government's debt issuance, will reach a final decision on the buybacks after holding meetings with bond market participants on June 20 and June 23, the sources told Reuters.

Yields on the longest-dated bonds hit record highs last month, reflecting weak demand from life insurers, major investors in super-long bonds, which have already completed their asset-liability duration matching to comply with the Financial Services Agency's regulations.

On Tuesday, yields on shorter-dated bonds edged up, amid worries that the possible cuts in the longer dated bonds would bring an increase in issuance of shorter-dated bonds.

The two-year JGB yield JP2YTN=JBTC rose 0.5 bp to 0.775% and the five-year yield JP5YTN=JBTC rose 0.5 bp to 1.035%.

The 10-year JGB yield JP10YTN=JBTC fell 0.5 bp to 1.465%