Japan considers trimming super-long bond issuance, sources say - Reuters

Japan considers trimming super-long bond issuance, sources say - Reuters

Japan is considering trimming its issuance of super-long bonds as yields on these notes have reached record highs, according to Reuters. The Ministry of Finance (MOF) is exploring adjustments to its bond program for the current fiscal year, which could involve cuts to its super-long bond issuance [1].

The move comes as yields on 20-, 30-, and 40-year Japanese government bonds (JGBs) have climbed to unprecedented levels, largely due to waning demand from traditional buyers like life insurers [1]. The yield on the 30-year JGB fell 12.5 basis points to 2.91% after the report, while the benchmark 10-year yield dropped 5 points to 1.455% [1].

The MOF is expected to make a decision after holding discussions with market participants around mid- to late-June [1]. If the MOF reduces issuance of super-long bonds, it is likely to increase issuance of shorter-dated debt instead, keeping the total planned size of JGB issuance for the current fiscal year unchanged at 172.3 trillion yen ($1.21 trillion) [1].

The decision is part of broader efforts by Japanese authorities to manage rising debt costs. A Japanese government advisory panel recently urged authorities to step up fiscal consolidation efforts, warning that the Bank of Japan's monetary tightening is fueling a steady rise in government bond yields [2]. The panel cautioned that Japan could face a sovereign credit rating downgrade if fiscal discipline continues to erode, which could trigger market turmoil and negative consequences for households and businesses [2].

The Bank of Japan is also expected to outline a roadmap for scaling back its bond purchases beyond March 2026 at its policy meeting in mid-June [2]. The central bank has consistently signaled its commitment to continue raising rates, provided its economic outlooks are realized.

Meanwhile, Japan has lost its position as the world’s largest creditor nation for the first time in 34 years, overtaken by Germany [3]. Despite Japan’s net external assets reaching a record 533.05 trillion yen in 2024, Germany’s assets surpassed this figure, aided by a stronger euro and robust current account surpluses [3].

References:
[1] https://www.investing.com/news/economy-news/exclusivejapan-to-consider-trimming-superlong-bond-issuance-sources-say-4064009
[2] https://www.bloomberg.com/news/articles/2025-05-27/japan-government-panel-warns-on-rising-yields-hit-on-finances
[3] https://www.investing.com/news/economy-news/japan-weighs-cutting-superlong-bond-sales-amid-yield-spike-reuters-4064002