Long-dated JGBs crawl higher after solid 20-yr sale

* 20-year auction attracts decent demand

* New superlongs draw curve players building flatteners

* Steepening pressure seen easing following the auction

By Shinichi Saoshiro

TOKYO, Oct 21 (BestGrowthStock) – Long-dated Japanese government
bonds crawled higher on Thursday after an auction of 20-year debt
attracted solid demand, relieving some of the pressure on
superlong maturities seen this month.

Market players said the sale generated decent investor
appetite as the 20 years appeared a good bargain after a sharp
steepening of the yield curve.

“The 20 years had become relatively cheap versus other JGB
maturities and also versus swaps, which helped to offset any
concern that yields had not risen far enough to attract buyers
who focus on absolute levels,” said Keiko Onogi, a senior JGB
strategist at Daiwa Securities Capital Markets.

The bid-to-cover ratio, a gauge of demand, at the 20-year
offering dipped to 4.41 from 4.56 at the previous auction in
September but was still significantly higher than 3.52, the
average ratio from the past 12 sales. [ID:nMOFJU5001]

The 10-year/20-year yield spread stood at 87 basis points,
after hitting a 2-