BNP Paribas Securities Japan Ltd. says investors should accept Japan's seven-year swap rate and sell similar-dated government bonds because the difference in yield between the two will narrow, Bloomberg News reports.

The swap rate is about 37 basis points higher than the seven-year bond yield, a gap approaching levels unseen since March when the failure of Bear Stearns Cos., the depreciation of the dollar against the yen to a 12-year low and the unwinding of positions by hedge funds rattled markets. The spread is almost a third wider than it should be, said Alessio Caldarera, a bond strategist at the Tokyo-based unit of France's largest bank.

``The current level is pricing in a full crisis scenario,'' Caldarera said in Tokyo. ``The crisis is way, way, way more muted than in March. There is still some uncertainty

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