Thursday, July 26, 2012

Tipping Point: Largest Japanese Pension Fund Begins Selling Japanese Government Bonds

Quite a change in supply/demand dynamics.
From ZeroHedge:
Kyle Bass Vindication Imminent? Largest Japanese Pension Fund Begins To Sell JGBs
Sayonara internal funding. In what we suspect will become a major issue (and warned in April of last year), Bloomberg reports that Japan’s public pension fund, the world’s largest, said it has been selling domestic government bonds as the number of people eligible for retirement payments increases.
 "Payouts are getting bigger than insurance revenue, so we need to sell Japanese government bonds to raise cash." 
It would appear the Ponzi has reached it's Tipping Point. Japan’s population is aging, and baby boomers born in the wake of World War II are beginning to reach 65 and eligible for pensions. That’s putting GPIF under pressure to sell JGBs so it can cover the increase in payouts.

The fund needs to raise about 8.87 trillion yen this fiscal year. GPIF is historically one of the biggest buyers of Japanese debt and held 71.9 trillion yen, or 63 percent of its assets, in domestic bonds as of March.

This leaves the biggest question "to whom will the pension fund sell?" After all it is all marginal and everyone just front-runs the biggest players (Governments and their Central-Bank caring internal funds)....MORE