Economy

JGBs for individuals struggling amid COVID crisis

REUTERS/Toru Hanai
Signboards are pictured at Nomura Securities Head Office in Tokyo, Japan, November 28, 2016. The signboard in bottom reads ‘Government bond’.

Jiji Press

15:05 JST, May 11, 2022

TOKYO (Jiji Press) — Issuances of government bonds tailored for individual investors, which were introduced in March 2003, are now floundering due to dwindling opportunities for in-person sales amid the pandemic.

Annual issuances of the JGBs targeting individuals have fallen to around ¥3 trillion in recent years, from over ¥7 trillion at their peak. To reverse the situation, the Finance Ministry is continuing to explore ways to spread information about the bonds, including via social media.

The issuance of JGBs designed for individual investors started with the aim of expanding sales to those other than institutional investors and ensuring stable JGB marketing. Currently, 10-year floating-rate bonds, and three- and five-year fixed-rate notes are offered to individuals.

After peaking in fiscal 2005 at ¥7.2 trillion, annual issuances of JGBs for individual investors plunged due to falls in domestic interest rates. The issue amount recovered to ¥5.2 trillion in fiscal 2019 after the MOF reviewed its methods for setting interest rates and the pace of issuances.

The ministry also beefed up its social media operations to tackle low recognition of the bonds among young people. The ministry launched a Twitter account in fiscal 2011 to release information about the bonds and then set up a Facebook page. In fiscal 2020, it began to use the Line messaging app and Instagram.

Despite such efforts, the novel coronavirus pandemic triggered a decrease in in-person sales of the bonds at financial institutions. Total issuances of the bonds fell to ¥3 trillion in fiscal 2020 and ¥2.9 trillion in fiscal 2021.