Bank of Japan : Outline of Outright Purchases of Japanese Government Securities

February 28, 2020

Bank of Japan

Financial Markets Department

Outline of Outright Purchases of Japanese Government Securities

The Bank of Japan, in conducting the outright purchases of Japanese government securities in a flexible manner, decided to conduct the purchases as follows, effective from March 2, 2020. The next announcement will be on March 31, 2020 at 5 p.m.

1. Outright purchases of Japanese government bonds (JGBs)

(1) Bonds to be purchased

JGBs with coupons (2-year bonds, 5-year bonds, 10-year bonds, 20-year bonds, 30-year bonds, 40-year bonds, floating-rate bonds, and inflation-indexed bonds).

(2) Frequency of purchases

Scheduled dates of the auctions at this moment are stated in the attachment. However, the Bank may change the frequency as needed.

(3) Amount to be purchased

The Bank will conduct purchases in a flexible manner, taking account of market conditions, aiming to achieve the target level of a long-term interest rate specified by the guideline for market operations.

(4) Method for auctions

A multiple-price competitive auction.

JGBs with coupons (excluding floating-rate bonds and inflation-indexed bonds): Counterparties bid their "desired yield spreads," which are calculated by subtracting "benchmark yields" from the yields at which counterparties seek to sell to the Bank.

Floating-rate bonds and inflation-indexed bonds: Counterparties bid their "desired price spreads," which are calculated by subtracting "benchmark prices" from the prices at which counterparties seek to sell to the Bank.

2. Outright purchases of JGBs <> method>

(1) Bonds to be purchased

Among JGBs with coupons (2-year bonds, 5-year bonds, 10-year bonds, 20-year bonds, 30-year bonds, and 40-year bonds), mainly on-the-run issues.

(2) Frequency of purchases

The Bank will conduct the auctions as needed, such as when the level of the yield curve changes substantially.

(3) Amount to be purchased

Depending on market conditions, the Bank may set the purchase size per auction to a fixed amount or to an unlimited amount.

(4) Method for auctions

Purchasing yields will be set per auction, by indicating the yield spreads from the benchmark yields which the Bank determines separately.

3. Outright purchases of treasury discount bills (T-Bills)

Regarding purchases of T-Bills, conducted as part of money market operations, the Bank will decide the purchase size per auction considering the effects on financial markets.

					(Attachment)
＜Monthly schedule (competitive auction method)＞
		Residual maturity	Purchase size per auction	Scheduled dates
		(100 million yen)
		Up to 1 year	About 100-1,000	About twice a month
	JGBs with	More than	More than 1 year	About 3,000-5,500
	coupons	1 year	and up to 3 years
		March 4, 9, 18 and 27
		and up to
	(excluding	More than 3 years	About 2,000-4,500
	inflation-	5 years	and up to 5 years
	indexed
	More than 5 years and up to 10	About 2,000-5,000	March 6, 11, 18 and 27
	bonds and		years
	floating-rate
		More than 10 years	About 500-2,000
	bonds)	More than	and up to 25 years
		March 9 and 23
		10 years
		More than 25 years	About 0-500
	Inflation-indexed bonds	About 300	About twice a month
	Floating-rate bonds (in the even months)	About 1,000	Once every two months

Note 1: With regard to residual maturities of more than 1 year and up to 5 years, and more than 10 years, the Bank may set sub-segments of more than 1 year and up to 3 years & more than 3 years and up to 5 years, and more than 10 years and up to 25 years & more than 25 years, respectively, and announce separate auctions for them at the same time.

Note 2: With regard to residual maturities of more than 1 year and up to 5 years, more than 5 years and up to 10 years, and more than 10 years, the Bank may announce auctions in addition to the dates stated above, taking account of market conditions (the purchase sizes of these auctions will not necessarily fall within those stated above). However, on the day of the JGBs auctions (including liquidity enhancement auctions) by the Ministry of Finance, the Bank will in principle refrain from announcing auctions for the corresponding maturity segments.

Note 3: With regard to the outright purchases of JGBs with coupons (excluding inflation-indexed bonds and floating-rate bonds), the Bank may set a lower limit on the yield spreads for purchasing yields, taking account of market conditions.

Note 4: As for the outright purchases of JGBs under the fixed-rate method, the Bank will announce auctions as needed, regardless of the description stated above.