News Column

Coupon for new 10-year gov't bonds falls to lowest level of 0.5%

September 1, 2014

The Finance Ministry cut the coupon rate for new 10-year Japanese government bonds on Tuesday to 0.5 percent, matching the record low previously marked in June 2003, as an upward trend for debt prices continues amid the Bank of Japan's massive asset purchases.

The coupon rate -- the interest rate stated on bonds at their issuance -- dropped 0.1 percentage point from the previous month to the latest level, the ministry said. Interest rates move inversely to bond prices.

In an auction held later Tuesday, the No. 335 issue of benchmark long-term bonds drew 7,882.4 billion yen in bids, of which the ministry accepted 2,199.9 billion yen. The debt will be issued on Sept. 22 and will mature on Sept. 20, 2024.

Demand for the Japanese government debt has been robust as the central bank has pledged to buy a large amount of government bonds every month, aiming to keep longer-term interest rates low to stimulate business and investment activities.

The 10-year interest rate is the benchmark rate that financial institutions use to lend to their customers, such as companies and home buyers.

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Source: Japan Economic Newswire

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