The day when the Bank of Japan can't find enough bonds to buy is drawing closer.
State-owned Japan Post Bank Co. will probably offload about ¥10 trillion ($83 billion) of Japanese government bonds in the year started April 1, according to Bank of America Merrill Lynch. That compares with ¥19.6 trillion in sales last fiscal year. Parent Japan Post Holdings Co. cut JGB holdings 13 percent to ¥154.9 trillion last fiscal year and may be nearing the end of an asset reshuffle, Merrill estimates.
The BOJ has been criticized by bond traders for sucking the life out of the world's second-largest bond market without getting any closer to its 2 percent inflation target. The central bank needs to find about ¥45 trillion in JGBs to buy this fiscal year to meet its goal for expanding the monetary base, said Shuichi Ohsaki, a rates strategist at Merrill Lynch.