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(Bloomberg) -- A slump in Japanese bonds worsened Tuesday after the weakest demand at a government debt auction in more than a decade highlighted worries over the central bank’s retreat from the market.

The rout drove up the 20-year yield by about 15 basis points to the highest since 2000, while the yield on 30-year bonds climbed to the most since that maturity was first sold in 1999. Yields on the 40-year tenor rose to a record high in a sign of nervousness ahead of a sale of that debt next week.

The surge in yields underscores structural challenges particular to Japan’s debt market, along with the concerns of bond investors globally about the risks posed by rising government spending. Key Japanese buyers like life insurers aren’t stepping in to fill the gap as the central bank scales back its purchases of the nation’s bonds. Meanwhile, the Prime Minister’s comparison of his own nation’s fiscal position to that of Greece this week sharpened the focus on Japan’s huge debt burden.

The result is that Japan’s bond curve is the steepest among major economies, even as yields globally are being driven higher, including for US Treasuries.

“I don’t want to touch super-long bonds,” said Ryoma Nagatomo, a senior fund manager at Norinchukin Zenkyoren Asset Management, citing simmering fiscal risks and oversupply. “The only way to improve market sentiment for super-long bonds is for the authorities to take action.”

Market participants were divided in opinions on how quickly the BOJ should reduce purchases of government bonds, according to reference material released Tuesday after meetings with the central bank. The views from representatives at banks and securities firms, as well as buy-side groups, will inform the bank when it reviews its debt buying at a policy board meeting on June 16-17.

Prime Minister Shigeru Ishiba said in parliament Monday that he disagrees with the idea of funding tax cuts with Japanese government bonds, signaling caution over additional government spending when the nation’s borrowing costs are rising.

“The government is not in a position to comment on interest rates, but the reality is we’re facing a world with them,” the premier said. “Our country’s fiscal situation is undoubtedly extremely poor, worse than Greece’s.”

The surge in yields comes as a time of underlying shakiness in the Japanese economy, which flipped back into reverse in the first three months of the year. Uncertainty also remains over trade talks with the US, with Japan seeking the removal of all additional US tariffs on its goods.

The bid-to-cover ratio at Tuesday’s 20-year bond sale — a key gauge of investor appetite — fell to the lowest since August 2012.

“The results were even worse than I had expected,” said Katsutoshi Inadome, a senior strategist at Sumitomo Mitsui Trust Asset Management Co. “Thirty- and 40-year bonds were being sold due to fiscal expansion risks and declining liquidity, but deteriorating market conditions have now spread to 20-year bonds, which had been relatively stable.”

What Bloomberg Strategists Say...

The super-long sector of the Japanese curve has been suffering from something akin to a domestic buyer’s strike, even though global funds have been piling into the long end.

— Mark Cranfield, Markets Live strategist. Read more on MLIV.

In another sign of sluggish demand at the bond sale, the tail, or the gap between average and lowest-accepted prices, came in at 1.14, the longest since 1987.

--With assistance from Masahiro Hidaka, Masaki Kondo and Ayai Tomisawa.

(Updates with context on reason for market moves)