10-Year JGB Coupon Raised to 0.5 Pct


Tokyo, Jan. 5 (Jiji Press)--Japan's Ministry of Finance on Thursday set the coupon rate on new 10-year Japanese government bonds at 0.5 pct, up sharply from 0.2 pct for the previous issue auctioned last month.

The coupon rate for the new 369th issue, put to an auction the same day, is the highest for a 10-year JGB issue since December 2014.

The hike reflected higher long-term interest rates following the Bank of Japan's tweak to its massive monetary easing policy, and will put a heavier burden on government finances due to an increase in interest payments.

According to the MOF, Thursday's auction of the 369th issue produced a highest accepted yield of 0.5 pct, which matched the BOJ's new cap on long-term interest rates.

At its latest policy-setting meeting that ended on Dec. 20 last year, the BOJ decided to raise its cap on the yield of the newest 10-year JGB issue, regarded as the benchmark long-term interest rate in Japan, to 0.5 pct from 0.25 pct. The decision, which market players took as an effective interest rate hike, resulted in the benchmark yield jumping as high as 0.48 pct the following day.

[Copyright The Jiji Press, Ltd.]

Jiji Press