Japan eyes 4.5 tril. yen rise in debt costs in FY 2026 on high yields

The Finance Ministry expects higher long-term interest rates to push up Japan’s debt-servicing costs in fiscal 2026 by around 4.5 trillion yen ($35 billion) from the next fiscal year, government sources said Wednesday, factoring in an uptrend in bond yields.

The estimate is based on the assumption that the yield on 10-year Japanese government bonds will be 1.6 percent for fiscal 2026, higher than the 1.1 percent for fiscal 2023 starting in April.

The Bank of Japan is guiding the benchmark yield to around zero percent, only allowing it to trade within a range of minus 0.5 percent and 0.5 percen...