TOKYO — Japan must create an environment where government bonds remain an attractive investment for financial institutions, such as by issuing shorter-duration debt, a finance ministry panel is likely to say in a draft proposal reviewed by Reuters.
The proposal highlights how the Bank of Japan 's exit in March from its radical stimulus is prodding the government to prepare for an era of rising interest rates, which will increase the cost of funding the country's huge public debt.The BoJ also decided last week to start tapering its huge bond buying and reduce its holdings which, at 589 trillion yen , make up roughly half of total Japan ese government bonds sold in the market.
The proposal will be among factors the government will take into account in compiling its debt issuance plan for the next fiscal year beginning in April 2025.The government must reduce the interest-rate risk investors bear by holding JGBs, such as by issuing shorter-duration debt and introducing floating-rate notes, the draft proposal said.
Lays Groundwork To Sell Shorter Debt
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