BOJ conducting survey of bond market participants over tapering plans, sources say

FILE PHOTO: The Japanese national flag waves at the Bank of Japan building in Tokyo, Japan March 18, 2024. REUTERS/Kim Kyung-Hoon/File Photo

By Takahiko Wada

TOKYO (Reuters) - The Bank of Japan is conducting a survey of Japanese government bond market participants over the central bank's bond-tapering plans, three sources familiar with the matter said on Thursday.

The survey is expected to be used as a basis for discussions at the BOJ's meetings with bond market participants on July 9-10, said the sources, who declined to be identified as the matter is private.

The BOJ decided to start tapering its huge bond buying and reduce its holdings which, at 589 trillion yen ($3.7 trillion), make up roughly half of total Japanese government bonds (JGB) sold in the market.

It has said it would hold the meetings with bond market participants before deciding details on how it plans to reduce its huge bond purchases in the next one to two years.

The survey is asking the market participants, including banks, brokerage houses and life insurers, about their expectations over the range and pace of tapering, the sources said.

Asked by Reuters, the BOJ confirmed it is contacting all the participants of the upcoming meetings to collect their views on the amount, pace and framework for the planned reductions.

The diminishing presence of the BOJ heightens the need for the government to find stable buyers of JGBs and avoid a bond selloff that could trigger a damaging spike in yields.

A finance ministry panel has called for an environment where government bonds remain an attractive investment for financial institutions, such as by issuing shorter-duration debt.

(Reporting by Takahiko Wada; Editing by Raju Gopalakrishnan)