The Finance Ministry has asked primary dealers for their views on further reducing issuance of longer-maturity government bonds, according to people familiar with the matter.

The ministry on Wednesday sent a questionnaire about potentially cutting back on enhanced liquidity auctions, said the people, who declined to be identified because the matter is not public.

The MOF action comes amid concerns that yields on long-dated bonds have risen rapidly to levels some consider excessive, and follows a plan announced in June to trim the volume of 20-, 30- and 40-year bonds sold at regular auctions.

The ministry did not immediately respond to a request for comment on the development.

The ministry typically consults with market participants ahead of its annual primary dealer meeting in September to determine enhanced liquidity and inflation-linked bond issuance amounts. This time, the survey asked for views on reducing enhanced liquidity issuance by ¥100 billion ($680 million) for maturities between 15.5 years and 39 years, as well as skipping the auction of those tenors in October.

Super-long bond yields are hovering around the highest in years as the Bank of Japan pulls back from its massive bond purchases, on top of mounting worries about fiscal expansion. The finance ministry also sent a questionnaire in May to market participants before reducing its issuance of super-long bonds starting in July.

The MOF regularly holds such auctions to issue additional older bonds that have become illiquid, to make it easier to buy and sell bonds and improve market stability.

"If the issuance of super-long bonds is reduced for two consecutive quarters, it could lead to expectations that issuance cuts will continue until the supply-demand balance improves, and the cheapness of super-long bonds will eventually be corrected,” says Ataru Okumura, senior interest-rate strategist at SMBC Nikko Securities.