Japan must fix finances to avoid JGB yield spike-BOJ

by on July 27, 2012 1:23 am BST

TOKYO, July 27 |
Thu Jul 26, 2012 9:23pm EDT

(Reuters) – Bank of Japan Deputy Governor
Hirohide Yamaguchi said on Friday Japanese bond yields may rise
if the country loses market trust in its finances or if overseas
investors start selling its bonds, stressing the need for
efforts toward fiscal reform.

“Europe’s sovereign debt problems have escalated because
markets have doubts over the region’s progress towards fiscal
reform,” Yamaguchi told a parliamentary committee.

“It’s important that Japan pursues fiscal reform” to restore
market trust in Japanese government bonds, he said, adding that
bond yields could rise if overseas investors start selling their
holdings of JGBs, which have increased significantly.