Japan’s Ministry of Finance proposes selling shorter term debt as the BOJ eyes rate hike

A draft proposal reviewed by Reuters:

  • 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
  • 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
    ($3.7 trillion), make up roughly half of total Japanese
    government bonds (JGB) sold in the market. The diminishing presence of the BOJ heightens the need for
    the government to find stable buyers of JGBs and avoid a bond
    selloff that could trigger a damaging spike in yields.

Info via Reuters report.

Trying to dig up a link. The policy adjustment at the BoJ and the likely moves on JGBs from the MoF are aa seismic shift in Japan’s financial landscape.

This article was written by Eamonn Sheridan at www.forexlive.com. Source