Japanese Bonds Gain as Losses at Hedge Funds Spur Purchases
Wednesday, August 1, 2007 : PermalinkBloomberg- Japan’s government bonds rose as reports of increasing losses at hedge funds globally spurred demand for the relative safety of government debt.
Ten-year bonds gained for a second day, pushing yields to the lowest in nine weeks. Emerging-market and corporate debt fell yesterday on concern investors will cut holdings of riskier assets after Bear Stearns Cos. halted redemptions from a third hedge fund. Yields on 10-year U.S. Treasuries fell to the least since May. Japan’s key stock indexes erased gains for this year.
“This is typical of a flight to quality,” said Tetsu Aikawa, deputy general manager of the capital markets division at Shinsei Bank Ltd. in Tokyo. “Stocks are falling on concern over financial institutions, boosting bonds.”
The yield on the benchmark 10-year bond fell 4 basis points to 1.75 percent as of 3:03 p.m. in Tokyo according to Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price of the 1.9 percent security due in June 2017 rose 0.339 yen to 101.262 yen. A basis point is 0.01 percentage point.
Ten-year bond futures for September delivery gained 0.35 to 133.50 as of the afternoon close on the Tokyo Stock Exchange.
Macquarie Fortress Investments Ltd., a fund run by Australia’s largest securities firm, was forced to sell assets and use the proceeds to reduce borrowings and comply with lending covenants, it said in a statement yesterday. Investors may lose A$300 million ($255 million), the Australian newspaper reported earlier.