• BOJ purchases raise concern it can't find enough securities
  • Japan bonds return 5.8% over six months, versus 2.2% for U.S.

Japan’s long-term bonds fell, sending the 40-year security to it s biggest decline in almost two weeks, after the central bank reduced the size of a buying operation on Thursday.

The Bank of Japan announced the cut when it entered the market to buy bonds Thursday amid concern its record purchases have been so large that it’s having trouble finding available securities. Demand for debt also waned after 30- and 40-year yields fell to records earlier this week.

“Because of reduced issuance of some maturities from April, I have expected a reduction in the BOJ’s buying,” said Tomohisa Fujiki, the chief rate strategist at BNP Paribas SA in Tokyo. The BOJ is probably concerned it won’t be able to meet its debt-buying targets, he said.

The 40-year yield climbed 10 basis points to 0.57 percent as of 7:10 a.m. in London, based on prices from Japan Bond Trading Co. The yield has risen from the record of 0.445 percent set March 22. The price of the 1.4 percent security due in March 2055 fell 4.172 yen to 126.47 yen. It was the biggest decline since March 9.

Benchmark 10-year yields were little changed at negative 0.09 percent. Same-maturity Treasury yields held at 1.88 percent.

Japan’s bonds are still beating their U.S. counterparts over the past six months. They returned 5.8 percent, versus 2.2 percent for Treasuries, based on the Bloomberg World Bond Indexes.

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