[Economy] Issuance of 'Japanese Government Bonds for Individuals' Expected to Reach Record High in a World with Interest Rates ── 10-Year Floating Rate to Reach 2.05% …

According to an announcement by the Ministry of Finance, it has been revealed that the issuance of ‘Japanese Government Bonds for Individuals’ in the domestic market for fiscal year 2026 is expected to reach a record high.

Against the backdrop of the full-scale arrival of a ‘world with interest rates,’ a shift of funds from households is accelerating toward these bonds as a safe asset management destination with no risk of principal loss. Furthermore, starting in January 2027, the name will be changed to ‘Japanese Government Bonds for Individuals Plus,’ with plans to expand eligibility to certain corporations and considerations for expanding the product lineup to include inflation-indexed bonds and ultra-long-term bonds.

We will summarize the overview of the situation, the background of the rapid increase in issuance, the latest interest rate levels, and future institutional reforms.

1. Issuance expected to reach a record high: Exceeded 6.1 trillion yen in just April-October

• Rapid expansion of purchases: The cumulative total for fiscal year 2026 from April to October issuance has surpassed 6.1 trillion yen, already exceeding the initial annual issuance plan (5.9 trillion yen).

• Monthly record: The issuance amount in October was 1.0251 trillion yen, marking the third consecutive month to exceed the 1 trillion yen mark. If this pace is maintained, it is expected to significantly surpass the previous record high set in fiscal year 2005 (7.2712 trillion yen).

2. Recent attractive interest rate levels and reasons for popularity

The applicable interest rates (before tax) for Japanese Government Bonds for Individuals offered in October have reached historically high levels.

• 10-Year Floating: 2.05% per annum (interest rates reviewed every six months)

• 3-Year Fixed: 2.07% per annum (fixed until maturity)

• 5-Year Fixed: 2.39% per annum (fixed until maturity)

[Main factors for the support of Japanese Government Bonds for Individuals]

1. Peace of mind with principal guarantee: Because they are issued by the government, the risk of default is extremely low and there is no risk of principal loss.

2. Low barrier to entry for small amounts: Can be purchased from as little as 10,000 yen.

3. Responsiveness to interest rate hikes (especially 10-year floating): Since interest payments increase every six months in response to rising market interest rates, they function as a hedge against inflation and additional rate hikes.

3. Future institutional reforms: Renaming to ‘Japanese Government Bonds for Individuals Plus’ and expansion to corporations

The Ministry of Finance has announced important policies aimed at further expanding the base of Japanese Government Bonds for Individuals and diversifying needs.

1. Expansion of eligible corporations (starting from January 2027 issuance): The name will be changed to ‘Japanese Government Bonds for Individuals Plus,’ and sales will be opened up not only to individuals as before, but also to certain corporations such as condominium management associations, educational corporations, and medical corporations. This will capture the investment needs of organizations with surplus funds.

2. Consideration of further product expansion: New offerings such as ‘inflation-indexed bonds,’ where principal and interest fluctuate according to price changes, and ‘ultra-long-term bonds’ with maturities exceeding 10 years are being considered, and discussions are underway to formulate a concrete future direction.

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