The Ministry of Finance issued ¥2.0255 trillion of Japanese government bonds for retail investors in November, with fixed-rate 5-year bonds accounting for 65% of the total. The long-term floating-rate 10-year bonds fell below that share for the first time in 20 years, while cumulative issuance for the fiscal year reached a record high.
The Ministry of Finance announced that November issuance of Japanese government bonds for retail investors totaled ¥2.0255 trillion, double the previous month’s amount. The breakdown was ¥1.3151 trillion in fixed-rate 5-year bonds, accounting for 65% of the total; ¥361 billion in floating-rate 10-year bonds, accounting for 18%; and ¥349.5 billion in fixed-rate 3-year bonds.
Demand for the fixed-rate 5-year bonds was strong, and issuance of these bonds during the year has significantly exceeded that of the other categories. The yield spread between the fixed-rate 5-year and floating-rate 10-year bonds widened to 0.34 percentage points, reaching a level not seen in 20 years. Cumulative issuance for the fiscal year totaled ¥8.1896 trillion, surpassing the previous record of ¥8.1896 trillion in fiscal 2005 in just 8 months.
Market participants said expectations for higher interest rates had weakened and viewed instability in the equity market as another factor driving some funds into government bonds. The Ministry of Finance has also begun work on future system design, with a review of the minimum purchase unit and deregulation of early redemptions among the issues under consideration.