Demand for the June issue of 10-year government bonds dropped only slightly at Tuesday's auction, indicating investors remain keen to buy bonds despite a drop in the coupon to an all-time low for the third straight month.

Reflecting the better-than-expected result, prices of 10-year bonds rose, sending the yield on the key issue to a new record closing low.

The yield on the No. 249 10-year, 0.6 percent bond briefly hit a record intraday low of 0.495 percent, dipping below 0.5 percent for the first time. In trading among dealers, it fell 0.03 percentage point from Monday to end at a record closing low of 0.5 percent.