What’s New: Central Government Debt (As of March 31, 2018) p. 2 Outstanding government bonds and borrowings increased to 1,087.8 trillion yen from

the end of December (1,085.8 trillion yen) by 2.1 trillion yen.

Long-term outstanding central government debt increased to 881.0 trillion yen from the end of December (879.5 trillion yen) by 1.5 trillion yen.

Monthly Topic: GDP and Foreign Investors’ Bond Holdings by Region p. 3-4 Real GDP contracted by 0.2% (annual rate 0.6%) from the previous quarter because

of the temporary factors including higher vegetable prices and downturns in smartphone sales. However, Japan’s recovery seems to be still ongoing because Real GDP expanded by 1.5% through FY2017.

The Ministry of Finance and the Bank of Japan released a region-by-region breakdown of JGBs and other Japanese bonds held overseas in the international balance of payments statistics. According to the statistics, JGB and other Japanese bond holdings by foreign investors at the end of 2017 totaled (1) 70.8 trillion yen in Europe, (2) 34.2 trillion yen in North America, (3) 31.1 trillion yen in Asia, (4) 7.9 trillion yen in Latin America, and (5) 4.7 trillion yen in the Middle East.

IR Office: “San-pou-yoshi”, an instruction by old Japanese merchants p. 5 A short essay on the concept “San-pou-yoshi” which was created by old Japanese

merchants, Oumi merchants.

(Statistics) JGB Primary Market … p. 6 Liquidity Enhancement Auctions and JGB Buy-Back … p. 7

JGB Secondary Market … p. 8 Investor Trends and JGB Outstanding … p. 10

Economic and Financial Trends … p. 14 Information … p. 15

Monthly Newsletter of the Ministry of Finance, Japan JAPANESE GOVERNMENT BONDS

SUMMARY

The Ministry of Finance www.mof.go.jp

Our fundamental goal of debt management policy is to achieve stable and smooth financing for our national accounts and to minimize medium-to-long term financing costs.

June 2018

-1-

Central Government Debt (As of March 31, 2018) On May 10, the Ministry of Finance released the update on central government debt. Debt

outstanding and composition as of the end of March 2018 are as follows.

The end of March 2018

(Actual)

Increase or Decrease(-) from

the End of the Previous Quarter

1) Outstanding Government Bonds and Borrowings

General Bonds 853.2 1.8

Fiscal Investment and Loan Program Bonds (FILP Bonds) 94.5 1.7

Borrowings, Subsidy Bonds, etc. 65.5 -0.3

Financing Bills (FBs) 74.6 -1.1

Total 1,087.8 2.1

2) Outstanding Government-Guaranteed Debts

Government-Guaranteed Debts 39.7 -1.0

The end of Mar. 2018 (Actual)

Increase or Decrease(-) from

the End of the Previous Quarter

The end of Mar. 2018 (Estimate)

① General Bonds 853.2 1.8 Approx. 864

② Fiscal Investment and Loan Program Bonds Not included Not included Not included

③ Borrowings, Subsidy Bonds, etc. (note 1) 27.8 -0.3 Approx. 29

④ Financing Bills Not included Not included Not included

Long-term debt outstanding of central governments 881.0 1.5 Approx. 893

⑤ Long-term debt outstanding of local governments (note 2) Approx. 195

Long-term debt outstanding of central and local governments (note 2) Approx. 1,087

-2-

(trillion yen)

Notes:

1. Figures may not sum up to the total because of rounding.

2. Above "General Bonds" includes amount (48,674.1 billion yen) of Front Loading Issuance of Refunding Bonds for refunding next year.

3. Above "Outstanding Government Bonds and Borrowings" includes government bonds and borrowings held by government.

4. Figures are total of the general account and all special accounts, and the coverage is different from the central government defined in SNA.

5. The data as of June 30, 2018 will be released on August 10, 2018.

Details: https://www.mof.go.jp/english/jgbs/reference/gbb/e201803.html

Outstanding government bonds and borrowings increased to 1,087.8 trillion yen from the end of December (1,085.8 trillion yen) by 2.1 trillion yen. This is mainly because the total for general bonds increased by 1.8 trillion yen and that for FILP bonds increased by 1.7 trillion yen.

Long-term outstanding central government debt, which does not include FILP bonds, FBs and some of the borrowings related to local governments, increased to 881.0 trillion yen from the end of December (879.5 trillion yen) by 1.5 trillion yen.

<Main Points>

Note 1: The borrowings of the Special Account for Allotment of Local Allocation Tax and Local Transfer Tax (end of FY2017:approx.¥32trillion) are included in [⑤Long-term

debt outstanding of local governments] because the burden of redemption funds falls on local governments.

Note 2: The actual figure of [⑤Long-term debt outstanding of local governments] is blank, because quarterly data has not been created.

Central Government Debt

(Reference) Long-term debt outstanding of central and local governments The MOF has announced the “Long-term debt outstanding of central and local governments” whose interest payments and redemption funds are mainly to be covered by tax revenues, from the viewpoint of transparency of fiscal management. The statistics are derived by adding the long-term debt outstanding of local governments to the above mentioned Central Government Debt, while excluding Fiscal Investment and Loan Program Bonds and Financing Bills.

(trillion yen)

What’s new

1.2

-0.7-0.4

0.2

1.20.9

0.8

-0.0

1

-1.8

-0

0.6

1.5

0 0.1

-0.3

0.8

0.3 0.2 0.2

0.70.5 0.5

0.1

-0.2

-3.5

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ

2012 2013 2014 2015 2016 2017 2018

(％)

Private Demand Public DemandForeign Demand Real GDP

Contributions to change from the previous quarter (Seasonally adjusted) (％)2018

1～3 4～6 7～9 10～12 1～30.7 0.5 0.5 0.1 -0.2 *** -0.60.6 0.8 -0.0 0.2 -0.2 *** -0.9

(0.6) (0.8) (-0.0) (-0.2) *** (-0.2) ***0.7 0.7 0.1 0.3 -0.3 (-0.2) -1.20.5 0.7 -0.7 0.2 -0.0 (-0.0) -0.00.5 0.7 -0.7 0.2 -0.0 (-0.0) -0.1

Excluding Imputed Rent 0.6 0.8 -0.9 0.2 -0.1 (-0.0) -0.31.2 0.9 -1.6 -2.7 -2.1 (-0.1) -8.20.6 0.8 1.0 0.6 -0.1 (-0.0) -0.3

(0.1) (-0.1) (0.4) (0.1) *** (-0.1) ***0.2 1.1 -0.5 -0.1 0.0 (0.0) 0.00.2 0.2 0.0 -0.0 0.0 (0.0) 0.1

-0.0 4.7 -2.6 -0.4 0.0 (0.0) 0.1(0.0) (0.0) (-0.0) (-0.0) *** (-0.0) ***(0.1) (-0.3) (0.5) (-0.1) *** (0.1) ***

1～3

Gross Domestic Product

Domestic Demand

Private DemandPrivate Consumption

Consumption of Households

2017 2018

Private Residential Investment

Change in Private Inventories

Government Consumption

Private Non-Resi. Investment

Public Demand

Public InvestmentChange in Public Inventories

Net Exports of Goods & Services

1. Quarterly Estimates of GDP Jan.–Mar. 2018

The first preliminary GDP estimate (Jan.-Mar. 2018) was released on May 16. Real GDP contracted by 0.2% (annual rate 0.6%) from the previous quarter. Real GDP contracted for the first time in 9 quarters. Consumer spending fell 0.0% from the previous quarter. This is mainly because of the

temporary factors including a spike in vegetable prices and downturns in smartphone sales. However, Japan’s recovery seems to be still ongoing because Real GDP expanded by 1.5% through FY2017.

2. Foreign Investors’ Bond Holdings by Region The Ministry of Finance and the

Bank of Japan released a region-by-region breakdown of JGBs and other Japanese bonds held overseas in the international balance of payments statistics.

According to the statistics, JGB and other Japanese bond holdings by foreign investors at the end of 2017 totaled (1) 70.8 trillion yen in Europe, (2) 34.2 trillion yen in North America, (3) 31.1 trillion yen in Asia, (4) 7.9 trillion yen in Latin America, and (5) 4.7 trillion yen in the Middle East.

A country-by-country breakdown of Japanese bonds held overseas indicates that the five largest holders of these bonds were (1) the U.S. with 33.4 trillion yen, (2) Belgium with 21.7 trillion yen, (3) Luxembourg with 18.8 trillion yen, (4) China with 14.1 trillion yen, and (5) the U.K. with 11.2 trillion yen.

Development of Real GDP (Quarterly, seasonally adjusted series)

MONTHLY TOPIC

Note1: Change from the previous quarter (seasonally adjusted) Note2: Annual rate Note3: The Figures in () indicate contributions to Changes in GDP. Source: Cabinet Office, Government of Japan

Source: Cabinet Office, Government of Japan

Note1

Note2

Note1: Figures include JGB, other bonds and bills. Note2: The breakdown does not necessarily give a region-by-region breakdown of final investors. Source: Ministry of Finance, Bank of Japan

(CY)

-3-

The two charts below indicate the breakdown of the statistics by bond maturity. According to

the statistics, long-term bond (more than one year) holdings by foreign investors at the end of 2017 totaled (1) 41.3 trillion yen in Europe, (2) 22.2 trillion yen in North America, (3) 21.1 trillion yen in Asia, (4) 4.8 trillion yen in Latin America, and (5) 2.7 trillion yen in the Middle East. Short-term (one year or less) bond holdings by foreign investors at the end of 2017 totaled (1) 29.5 trillion yen in Europe, (2) 12.0 trillion yen in North America, (3) 10.1 trillion yen in Asia, (4) 3.1 trillion yen in Latin America, and (5) 2.2 trillion yen in Oceania.

Note1: Figures include T-Bill, other bonds and bills. Note2: The breakdown does not necessarily give a region-by-region breakdown of final investors Source: Ministry of Finance, Bank of Japan

Short-term bonds (one year or less)

Note1: Figures include JGB, other bonds and bills. Note2: The breakdown does not necessarily give a region-by-region breakdown of final investors. Source: Ministry of Finance, Bank of Japan

Long-term bonds (more than one year)

-4-

MOF International Investment Position (Regional Portfolio Investment and Financial Derivatives Position (Liabilities)) URL: https://www.mof.go.jp/international_policy/reference/iip/rdip2017.xls BOJ Time-Series Data Search (historical data, etc.) URL: http://www.stat-search.boj.or.jp/index_en.html

Have you ever heard of "San-pou-yoshi (三方良し)" in Japanese? “San”

or “三” means three. “Pou” or “方” usually means direction, but in this case can mean stakeholders. “Yoshi” or “良し” means good. So, this phrase can be understood as “Good for all three (stakeholders)” or "Win-Win-Win." It is a famous old management instruction of Oumi merchants. They were famous for their success as merchants from the 17th Century. They were local merchants from Shiga prefecture which used to be a traffic hub in Japan.

Their instruction told them to act to satisfy not only themselves as sellers and their customers who are buyers, but also to contribute to the community through their business. As their business expanded outside their local area, it was necessary to build trust in their business areas. “The only winners are the sellers and their buyers” could be fine for both of them in a short-term period, but they might not be able to do their business for a long time. This "Good for all three" or "Win-Win-Win" relation makes their business a long-lasting one.

As the Editor’s personal view, I was wondering whether Oumi merchants might be one of the leading businesspeople in CSR (Corporate Social Responsibility). Well, this instruction also may fit the JGB market. “Good for all three - the Debt Management Office, investors, and the JGB market” This might be key factor of our long-lasting relation.

-5-

IR OFFICE

If you have any questions regarding the contents of this newsletter, please do not hesitate to contact us at: JGB-IR@mof.go.jp

Auction Results

（Bonds）

Auction Date Type of Security Issue Number Maturity Date Nominal

Coupon

Amounts of Competitive

Bids (billion yen)

Amounts of Bids

Accepted (billion yen)

Yield at the Lowest

Accepted Price

Yield at the Average

Price

Amounts of Non-Competitive Bids Tendered

/Accepted (billion yen)

Amounts of Bids Accepted at the

Non-price- competitive Auction Ⅰ (billion yen)

Amounts of Bids Accepted at the

Non-price- competitive Auction Ⅱ (billion yen)

3/1/2018 10-year 350 3/20/2028 0.1% 8,430.3 1,859.5 0.062% 0.061% 0.465 438.9 340.1 3/6/2018 30-year 58 3/20/2048 0.8% 2,740.8 647.1 0.753% 0.750% - 152.1 88.1 3/13/2018 5-year 135 3/20/2023 0.1% 7,469.5 1,786.3 ▲0.106% ▲0.108% - 413.0 - 3/15/2018 20-year 164 3/20/2038 0.5% 3,597.3 804.9 0.544% 0.543% - 194.1 127.7 3/27/2018 40-year 10 3/20/2057 0.9% 1,593.5 499.5 0.885% - - - 66.6 3/29/2018 2-year 387 4/15/2020 0.1% 7,919.8 1,704.5 ▲0.137% ▲0.138% - 395.4 - 4/3/2018 10-year 350 3/20/2028 0.1% 7,445.8 1,789.7 0.033% 0.032% 1.286 408.2 328.4 4/12/2018 30-year 58 3/20/2048 0.8% 2,451.0 565.1 0.716% 0.714% - 133.7 103.7 4/17/2018 5-year 135 3/20/2023 0.1% 7,144.8 1,623.9 ▲0.118% ▲0.120% - 375.4 - 4/19/2018 20-year 164 3/20/2038 0.5% 2,972.2 804.4 0.505% 0.500% - 194.7 - 4/24/2018 2-year 388 5/15/2020 0.1% 9,349.0 1,733.3 ▲0.134% ▲0.134% - 366.5 199.2 5/8/2018 10-year 350 3/20/2028 0.1% 7,446.3 1,770.9 0.047% 0.046% 0.386 427.6 232.8 5/10/2018 10-year Inflation-Indexed Bonds 23 3/10/2028 0.1% 1,605.7 399.6 ▲0.513% - - - 47.5 5/15/2018 30-year 58 3/20/2048 0.8% 2,497.7 566.6 0.746% 0.746% - 132.5 96.5 5/17/2018 5-year 135 3/20/2023 0.1% 6,999.8 1,657.1 ▲0.101% ▲0.103% - 342.1 - 5/22/2018 20-year 164 3/20/2038 0.5% 3,295.1 799.8 0.533% 0.532% - 199.1 - 5/29/2018 40-year 11 3/20/2058 0.8% 1,567.0 399.4 0.865% - - - 57.3 5/31/2018 2-year 389 6/1/2020 0.1% 8,425.5 1,716.4 ▲0.144% ▲0.147% - 383.0 15.0

Auction Results

（Treasury Discount Bills）

Auction Date Type of Security Issue Number Maturity Date

Amounts of Competitive Bids

(billion yen)

Amounts of Bids Accepted

(billion yen)

Yield at the Lowest

Accepted Price

Yield at the Average

Price

Amounts of Bids Accepted at the

Non-price- competitive Auction Ⅰ (billion yen)

3/1/2018 3-month 742 6/4/2018 15,045.16 3,578.08 ▲0.1944% ▲0.2112% 841.90 3/7/2018 6-month 743 9/10/2018 9,656.10 1,884.38 ▲0.1543% ▲0.1623% 415.60 3/8/2018 3-month 744 6/11/2018 13,994.70 3,563.06 ▲0.1824% ▲0.1976% 826.90 3/15/2018 3-month 745 6/18/2018 15,809.76 3,535.38 ▲0.1423% ▲0.1539% 834.60 3/16/2018 1-year 746 3/20/2019 10,318.40 1,885.16 ▲0.1408% ▲0.1427% 414.80 3/22/2018 3-month 747 6/25/2018 15,692.90 3,519.17 ▲0.1503% ▲0.1587% 830.80 4/3/2018 3-month 748 7/2/2018 17,689.80 3,545.54 ▲0.1326% ▲0.1393% 804.40 4/5/2018 3-month 749 7/9/2018 20,192.30 3,545.14 ▲0.1303% ▲0.1355% 834.80 4/6/2018 6-month 750 10/10/2018 13,304.10 1,868.80 ▲0.1534% ▲0.1594% 431.20 4/12/2018 3-month 751 7/17/2018 18,885.40 3,545.27 ▲0.1625% ▲0.1685% 834.70 4/18/2018 1-year 752 4/22/2019 11,598.50 1,700.10 ▲0.1757% ▲0.1796% 399.90 4/19/2018 3-month 753 7/23/2018 16,287.90 3,576.56 ▲0.1744% ▲0.1804% 843.40 4/26/2018 3-month 754 7/30/2018 15,381.10 3,575.27 ▲0.1358% ▲0.1556% 804.70 5/2/2018 3-month 755 8/6/2018 18,453.30 3,581.04 ▲0.1323% ▲0.1411% 838.90 5/9/2018 6-month 756 11/12/2018 10,037.80 1,917.48 ▲0.1255% ▲0.1294% 382.50 5/11/2018 3-month 757 8/13/2018 15,766.40 3,620.95 ▲0.1222% ▲0.1275% 789.00 5/17/2018 1-year 758 5/20/2019 10,647.15 1,706.15 ▲0.1371% ▲0.1391% 393.80 5/18/2018 3-month 759 8/20/2018 17,888.30 3,571.64 ▲0.1323% ▲0.1391% 808.30 5/25/2018 3-month 760 8/27/2018 15,985.50 3,532.64 ▲0.1383% ▲0.1431% 817.30

Auction Calendar for Jun. 2018 – Aug. 2018 Auction Date Issue Auction Date Issue Auction Date Issue Auction Date Issue

6/1(Fri) T-Bills (3-month) 6/28(Thu) 2-year 7/20(Fri) Liquidity Enhancement Auction (remaining maturities of 1-5 years) 8/16(Thu) 5-year

6/5(Tue) 10-year 6/29(Fri) T-Bills (3-month) 7/24(Tue) 40-year 8/17(Fri) T-Bills (3-month)

6/7(Thu) T-Bills (6-month) 7/3(Tue) 10-year 7/26(Thu) 2-year 8/21(Tue) 20-year

6/7(Thu) Liquidity Enhancement Auction (remaining maturities of 15.5-39 years) 7/5(Thu) 30-year 7/27(Fri) T-Bills (3-month) 8/23(Thu) Liquidity Enhancement Auction

(remaining maturities of 5-15.5 years)

6/8(Fri) T-Bills (3-month) 7/6(Fri) T-Bills (3-month) 8/2(Thu) 10-year 8/24(Fri) T-Bills (3-month)

6/12(Tue) Liquidity Enhancement Auction (remaining maturities of 5-15.5 years) 7/9(Mon) T-Bills (6-month) 8/3(Fri) T-Bills (3-month) 8/28(Tue) Liquidity Enhancement Auction

(remaining maturities of 15.5-39 years)

6/14(Thu) T-Bills (3-month) 7/10(Tue) 5-year 8/7(Tue) 10-year Inflation-Indexed Bonds 8/30(Thu) 2-year 6/19(Tue) T-Bills (1-year) 7/12(Thu) 20-year 8/9(Thu) T-Bills (6-month) 8/31(Fri) T-Bills (3-month)

6/19(Tue) 30-year 7/13(Fri) T-Bills (3-month) 8/9(Thu) 30-year 6/21(Thu) 5-year 7/18(Wed) Liquidity Enhancement Auction

(remaining maturities of 5-15.5 years) 8/10(Fri) T-Bills (3-month) 6/22(Fri) T-Bills (3-month) 7/19(Thu) T-Bills (1-year) 8/14(Tue) T-Bills (Approx.2-month) 6/26(Tue) 20-year 7/20(Fri) T-Bills (3-month) 8/16(Thu) T-Bills (1-year)

Top 10 PDs by Total Purchase in Auctions (Calculated by Duration) (Oct. 2017 ～ Mar. 2018) 1 Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. 6 Merrill Lynch Japan Securities Co., Ltd. 2 Nomura Securities Co., Ltd. 7 SMBC Nikko Securities Inc. 3 Daiwa Securities Co. Ltd. 8 Deutsche Securities lnc. 4 Mizuho Securities Co., Ltd. 9 Goldman Sachs Japan Co., Ltd. 5 BNP Paribas Securities (Japan) Limited 10 Morgan Stanley MUFG Securities Co., Ltd.

JGB PRIMARY MARKET

Note.1: The above calendar may be changed or added in light of changes in circumstances. In such cases, it will be announced in advance. Note.2: Each issue amount will be announced about one week prior to each auction date. Note.3: The issue date of Treasury Discount Bills auctioned on August 14, 2018 is August 15, 2018, and the maturity date is October 3, 2018.

(Until 31 May 2018)

(Until 31 May 2018)

-6-

Results of Liquidity Enhancement Auctions

Auction Date Amounts of Competitive

Bids (billion yen)

Amounts of Bids

Accepted (billion yen)

Average Accepted Spread

Highest Accepted Spread

Issues Re-opened

3/8/2018 1,472.8 300.0 ▲0.033% ▲0.023% 5-year(124, 125, 126, 131) 10-year(311) 20-year(43)

3/20/2018 1,948.9 549.4 ▲0.002% 0.001% 10-year(328, 329, 330, 331, 338) 20-year(61, 66, 73, 81, 86, 122, 130) 30-year(2, 3, 10)

4/5/2018 1,242.2 499.5 0.002% 0.008% 20-year(150) 30-year(22, 26, 27, 28, 29, 32, 33, 34, 35, 36, 40, 41, 42, 45, 46, 47, 48, 49, 50, 51, 52, 54, 56, 57) 40-year(1, 2, 4, 5, 6)

4/10/2018 2,336.6 598.2 ▲0.002% 0.000% 10-year(329, 330, 332, 334, 340, 341, 346, 348) 20-year(63, 75, 76, 77, 84, 85, 92, 93, 94, 97, 113, 120, 125, 126, 134, 143, 144, 146)

5/2/2018 1,459.5 399.4 ▲0.008% ▲0.006% 5-year(123, 124, 125, 126, 127, 131) 10-year(309, 310, 311, 312, 313, 314, 325) 20-year(43)

5/24/2018 2,006.7 597.1 ▲0.008% ▲0.007%

10-year(334, 335, 339) 20-year(64, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 85, 86, 87, 90, 91, 92, 93, 94, 95, 96, 99, 100,

101, 104, 105, 107, 108, 109, 115, 116, 117, 118, 122, 136, 141, 146) 30-year(2, 3, 4, 10)

Target Zones of Liquidity Enhancement Auctions for the First Quarter of FY 2018

10-year Inflation-Indexed

Auction Date Amounts of

Competitive Bids (billion yen)

Amounts of Bids Accepted

(billion yen)

Average Accepted

Spread (yen)

Highest Accepted

Spread (yen) Issue Numbers

10/20/2017 90.2 20.0 ▲0.182 ▲0.09 18, 19, 20, 22 12/11/2017 102.5 20.0 ▲0.004 0.05 18, 19, 20, 21, 22 2/13/2018 115.4 20.0 ▲0.211 ▲0.17 17, 20, 21, 22 4/11/2018 111.6 20.1 ▲0.082 ▲0.06 20, 21, 22

LIQUIDITY ENHANCEMENT AUCTIONS AND JGB BUY-BACK

①Remaining maturity : approx.1‐～5‐year

③Remaining maturity : approx.15.5‐～39‐year

Note1： JN shows 2‐year JGBs. JS shows 5‐year JGBs. JL shows 20‐year JGBs. JX shows 30‐year JGBs. JU shows 40‐year JGBs. Outstanding amount is as of the end of March 2018. Note2： All issues in the graph above will be eligible afterward.

Buy-back Results

(Until 31 May 2018)

(Until 31 May 2018)

②Remaining maturity : approx.5‐～15.5‐year

-7-

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,000

JN37

6

JN37

7

JS11

8

JS11

9

301

302

JN37

8

JN37

9

JN38

0

JS12

0

JS12

1

303

304

JL43

JN38

1

JN38

2

JN38

3

JS12

2

305

JN38

4

JN38

5

JN38

6

JS12

3

306

307

JL44

JL45

JS12

4

308

309

JL46

JS12

5

310

311

JL47

JS12

6

312

JL48

JS12

7

313

314

JL49

JL50

JS12

8

315

316

JL51

JS12

9

317

318

JL52

JS13

0

319

320

JL53

JL54

JS13

1

321

322

JL55

JS13

2

323

324

JL56

JL57

JS13

3

325

JL58

JS13

4

326

327

JL59

JL60 328

JL61

Amount issued by Liquidity Enhancement Auction Outstanding amount in the market (excluding amount issued by Liquidity Enhancement Auction)

1 2 5

(Remaining maturities)

（billion yen)

0500

1,0001,5002,0002,5003,0003,5004,000

JL14

7

JX13

JL14

8

JX14

JL14

9

JX15

JL15

0

JX16

JL15

1

JX17

JL15

2

JX18

JL15

3

JX19

JL15

4

JX20

JL15

5

JX21

JL15

6

JX22

JL15

7

JX23

JL15

8

JX24

JL15

9

JX25

JL16

0

JX26

JL16

1

JL16

2

JX27

JL16

3

JX28

JX29

JX30

JX31

JX32

JX33

JX34

JX35

JX36

JX37

JX38

JX39

JX40

JX41

JX42

JX43

JX44

JX45

JX46

JX47

JX48

JX49

JX50

JX51

JX52

JX53

JX54

JX55

JX56

JX57 JU1

JU2

JU3

JU4

JU5

JU6

JU7

JU8

JU9

JU10

Amount issued by Liquidity Enhancement Auction Outstanding amount in the market (excluding amount issued by Liquidity Enhancement Auction)（billion yen)

(Remaining maturities)15.5 20 39

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

329

JL62

JL63 33

033

1JL

64 332

JL65

JL66 33

3JL

67JL

68JL

69 334

JL70

JL71 33

5JL

72 336

337

JL73

JL74 33

8JL

75JL

76JL

77 339

JL78

JL79

JL80 34

0JL

81JL

82 341

JL83

JL84 34

2JL

85JL

86JL

87 343

JL88

JL89 34

4JL

90JL

91 345

JL92 34

6JL

93JL

94 347

JL95

JL96 34

8JL

97JL

98 349

JL99

JL10

0JL

101

JL10

2JL

103

JL10

4JL

105

JL10

6JL

107

JL10

8JL

109

JL11

0JL

111

JL11

2JL

113

JX1

JL11

4JL

115

JX2

JL11

6JL

117

JX3

JL11

8JL

119

JL12

0JL

121

JL12

2JX

4JL

123

JL12

4JL

125

JL12

6JL

127

JX5

JL12

8JL

129

JL13

0JL

131

JX6

JL13

2JL

133

JL13

4JL

135

JL13

6JX

7JL

137

JL13

8JL

139

JL14

0JX

8JL

141

JL14

2JX

9JL

143

JL14

4JX

10JL

145

JX11

JL14

6JX

12

Amount issued by Liquidity Enhancement Auction Outstanding amount in the market (excluding amount issued by Liquidity Enhancement Auction)

5 10 15.5

(Remaining maturities)

（billion yen)

Note: BEI (Japan: 10 year) is calculated based on the compound interest rate of the new Inflation-Indexed Bonds and the 10-Year Bonds

Source: Japan: Calculation by the Ministry of Finance based on the information on interest rates offered by NIKKEI QUICK. U.S.A., U.K.: Bloomberg.

JGB SECONDARY MARKET

JGB Yield Curves

Source: Japan Bond Trading Co., Ltd.

Yields of JGB

Long - Term Interest Rates （10Yr） Source: Bloomberg

Source: Bloomberg

-8-

Yield and Volatility (10Yr)

Break-Even Inflation Rates

Source: Bloomberg, Calculation by the Ministry of Finance

(Until 27 April 2018)

(Until 27 April 2018)

(Until 27 April 2018)

(Until 27 April 2018)

-1%

0%

1%

2%

3%

4%

5%

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

BEI (Japan : 10 year)

BEI (U.S.A. : 10 year)

BEI (U.K. : 10 year)

Short-Term Interest Rates

Source: Bank of Japan, Japanese Bankers Association

JGB Over-the-Counter Trading Volume (TOKYO)

Trading Volume of 10-Year JGB Futures

Repurchase Transactions

-9-

Source: Japan Securities Dealers Association

Source: Tokyo Stock Exchange (until Mar.2014), Osaka Exchange (from Apr. 2014)

Source: Japan Securities Dealers Association

(trillion yen)

(trillion yen)

(trillion yen)

(Until 27 April 2018)

-0.1%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Call Rate (Uncollateralized Overnight)

TIBOR 3-months (Euro-Yen)

Basic Loan Rate

Apr 2013(Actual)

Apr 2018(Actual)

Monetary Base 155 498

JGBs 98 434

CP 1.4 2.3

Corporate Bonds 2.9 3.2

ETFs 1.7 19.5

J-REITs 0.13 0.47

Total Assets 175 535

Super long-term

Long-term

Medium-term

T-bills

-9.0

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

JanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr

City Banks

Net Purchase

Net Sale

2013 2014 2015 2016 2017 2018

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

JanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr

Regional banks

Net Purchase

Net Sale

2013 2014 2015 2016 2017 2018

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

JanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr

Life and non-life insurance companies

Net Purchase

Net Sale

2013 2014 2015 2016 2017 2018

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

JanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr

Foreigners

Net Purchase

Net Sale

2013 2014 2015 2016 2017 2018

(unit: trillion yen)(unit: trillion yen)

(unit: trillion yen) (unit: trillion yen)

-10-

Trends in Bank Assets by Types

INVESTOR TRENDS AND JGB OUTSTANDING Trends in JGBs Transactions (by investor type)

BOJ Trends

Regional Banks City Banks

Source: Bank of Japan

(trillion yen) (trillion yen)

Loans

Cash and Deposits

Government Bonds

Municipal Bonds

Corporate Bonds

Equities

Foreign Securities

Source: Bank of Japan

Source: Japan Securities Dealers Association

-11-

JGBs Holdings by Foreign Investors

Banks(Banking Accounts) Life Insurance Companies

Transactions of Domestic Securities by Non-Residents

Note: “JGB” includes T-Bills. Source: Bank of Japan

Source: Ministry of Finance

Transactions of Foreign Securities by Residents (by Investor types)

Foreign Investors Presence

Note.1: Quarterly basis. Note.2: “JGB” includes T-Bills. The figures of ②excludes dealers’ transactions. Source: Bank of Japan, Japan Securities Dealers Association, Tokyo Stock Exchange,

Osaka Exchange

(trillion yen)

(trillion yen)

Source: Japan Securities Dealers Association

(trillion yen)

Outstanding of Repurchase Agreements (by Investor types)

Source: Ministry of Finance

Source: Japan Securities Dealers Association

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

850

900

FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

17.0% 17.8% 18.3% 18.2% 17.9% 17.3% 16.4% 15.1% 14.3% 13.4%

11.4%13.0% 12.5% 11.9% 12.4% 12.0% 11.1% 10.6% 10.5% 10.5%

8.9%8.5%

7.9% 8.6% 8.1% 7.8% 7.8% 7.9% 7.7% 8.2%9.2%8.4%

9.0% 8.6% 8.1% 8.1% 8.2% 7.8% 8.2% 7.1%8.4%

8.8%8.4% 7.8% 7.8% 7.8% 7.4% 7.8% 6.8% 6.8%

5.3%

5.2%4.7%

4.9% 4.4% 4.2% 5.0% 4.2% 4.4% 5.0%

5.6%

4.9%5.2%

4.6% 4.5%5.0% 4.3% 4.4% 4.8% 4.7%

5.5%

5.5%4.8%

4.8%5.3%

4.5% 4.5% 5.0% 4.8% 5.0%

6.2%

5.2%5.1%

5.6%4.7%

4.8% 5.2% 4.9% 5.1% 4.7%

5.0%

4.7%5.2%

4.4%4.3%

4.6% 4.2% 4.5% 4.1% 4.0%

14.8%

14.4%

14.4%14.9%

15.6%16.5%

17.7% 18.4% 19.2% 19.6%

2.7%

3.6%

4.6%

5.8%

6.7%

7.5%8.3%

9.4%10.1%

11.1%

20 yrs-

10-20 yrs

9-10 yrs

8-9 yrs

7-8 yrs

6-7 yrs

5-6 yrs

4-5 yrs

3-4 yrs

2-3 yrs

1-2 yrs

-1 yr

（trillion yen）

（at the end of FY）

545.9

594.0

636.3669.9

705.0

743.9

774.1

805.4830.6

*years to maturity

Average

YTM* 6Y3M 6Y5M 6Y8M 7Y0M 7Y3M 7Y7M 8Y0M 8Y5M 8Y7M 8Y10M

Average YTM*

(excluding saving

bonds)6Y4M 6Y6M 6Y10M 7Y1M 7Y5M 7Y8M 8Y0M 8Y5M 8Y8M 8Y11M

853.2

General Government

(ex Public Pensions)

3.4

0.3%

Fiscal Loan

Fund

0.0

0.0%

BOJ

449.4

41.1%

Banks,etc.

211.1

19.3%

Life and Non-life

Insurance,etc.

205.6

18.8%

Public

Pensions

45.9

4.2%

Pension

Funds

30.1

2.8%

Foreigners

122.5

11.2%

Households

12.4

1.1%

Others

12.0

1.1%

General Government

(ex Public Pensions)

3.4

0.3%

Fiscal Loan

Fund

0.0

0.0%

BOJ

427.2

43.2%

Banks,etc.

193.9

19.6%

Life and Non-life

Insurance,etc.

203.5

20.6%

Public

Pensions

45.9

4.6%

Pension

Funds

30.1

3.0% Foreigners

59.8

6.1%

Households

12.4

1.3%

Others

12.0

1.2%

JGB and T-Bill Holders

Breakdown by JGB and T-Bill Holders (The end of Dec. 2017 QE)

Source: Bank of Japan “Flow of Funds Accounts (Preliminary Figures)” Note1: “JGB” includes “FILP Bonds.” Note2: “Banks, etc.” includes “Japan Post Bank”, “Securities investment trust” and “Securities companies.” Note3: “Life and Non-life insurance, etc.” includes “Japan Post Insurance.”

(trillion yen)

Breakdown of Outstanding Amount of General Bonds by Remaining Years to Maturity

T-Bill Holders

Total 104.2 trillion yen

JGB Holders

Total 988.2 trillion yen

Total 1,092.4 trillion yen

-12-

General Government

(ex Public Pensions)

0.0

0.0% Fiscal Loan

Fund

0.0

0.0%BOJ

22.2

21.3%

Banks,etc.

17.2

16.5%

Life and Non-life

Insurance,etc.

2.1

2.1%

Public

Pensions

0.0

0.0%

Pension

Funds

0.0

0.0%

Foreigners

62.7

60.1%

Households

0.0

0.0%

Others

0.0

0.0%

Types The amount of redemption at maturity Scheduled redemption date

10-Year Bonds 7,423.9 June 20

10-Year Inflation-Indexed Bonds 446.7 June 10

5-Year Bonds 9,333.1 June 20

2-Year Bonds 2,599.7 June 15

Treasury Bill 2,954.0 June 20

Total 22,757.4

Source: Ministry of Finance

Time-to-Maturity Structure of Outstanding JGB（Mar. 2018）

General Bonds Issuance Amount and Outstanding

Note 1: Issuance Amount: revenue basis, FY2007-2016: Actual, FY2017: Supplementary budget, FY2018: Initial budget Note 2: Outstanding: nominal basis, FY2007-2016: Actual, FY2017 Supplementary budget, FY2018: Initial budget Source: Ministry of Finance

Market-held Balance of the Inflation-Indexed Bonds (as of the end of April, 2018)

(trillion yen)

Scheduled redemption of JGB at maturity in June, 2018

Note.1: The figures are based on the outstanding JGBs at the end of April, 2018. Note.2: The figures are the scheduled redemption at maturity and may be different from the actual redemption due to Buy-back of JGBs. Note.3: About Inflation-Indexed Bonds, the amount of redemption at maturity is adopted the inflation-adjusted principal as of April 30, 2018. Note.4: The figures do not include "JGB for Retail Investors". Note.5: If the redemption date coincides with bank holiday, the payment of redemption is carried out on the following business day. Note.6: Figures may not sum up to total because of rounding.

(billion yen)

Source: Ministry of Finance, Bank of Japan

541.5 545.9594.0

636.3669.9

705.0743.9 774.1

805.4 830.6863.9 882.8

124.6 127.1 142.4 143.1

163.1 163.3 153.6 158.0 150.5

148.3 144.1 137.9

100

200

300

400

500

600

700

800

900

0

30

60

90

120

150

180

07 08 09 10 11 12 13 14 15 16 17 18

Outstanding (right-hand scale) Issuance Amount (left-hand scale)

0100200300400500600700800900

1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,200

16 17 18 19 20 21 22

(billion yen)

(issue number)

Outstanding amount(excl. BOJ holding)

BOJ holding

Old type(without

floor)

Market BOJ TotalOld 252 182 435New 6,529 1,397 7,927

-13-

114.15

89.69

69.54

60.46 58.31

42.45 39.88

42.29

40.1934.47

12.1914.36 16.29 15.7918.59

18.16 19.97 19.2718.00

14.76

4.76 5.37 6.41 7.01 6.248.19 9.46 10.83 9.24 8.94

1.31 1.33 1.93 1.88 1.96 2.09 2.28 2.42 2.70

0102030405060708090

100110120130

18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56

(trillion yen）

(FY)

Treasury Bills2-yr bondsJGBs for retail investors (3-yr-Fixed-rate)JGBs for retail investors (5-yr-Fixed-rate)5-yr bondsInflation-Indexed bondsJGBs for retail investors (Floating-rate)10-yr bonds15-yr-floating-rate bonds20-yr bonds30-yr bonds40-yr bonds

Average remaining years to maturity： 8 years and 10 months

0.6%

0.1%

-1

0

1

2

3

4

Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

(%)

CPI

CPI excluding food (excludingalcohilic beverages) and energy

Change from the previous year

Apr.4, 2013BOJ released QQE

0.4

0.6

0.8

1

1.2

1.4

1.6

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

（ratio）

Apr, 20181.59 times

Apr, 20182.5％

Aug, 20090.42times

Jul, 20095.5％

Job opening-to-application ratio(right scale)

Unemployment rate(left scale)

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Jan-

09

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

May

-13

Sep-

13

Jan-

14

May

-14

Sep-

14

Jan-

15

May

-15

Sep-

15

Jan-

16

May

-16

Sep-

16

Jan-

17

May

-17

Sep-

17

(Diffusion index)

Large enterprises/Manufacturing

Large enterprises/Non-Manufacturing

Small enterprises/Manufacturing

Small enterprises/Non-Manufacturing

Real GDP Growth Rate

Employment Conditions

Prices

Changes in Current Account

Monetary Base Indices of Industrial Production

Total Value of Machinery Orders (Private Sector exc. Volatile orders)

TANKAN (Business Conditions)

Source: Cabinet Office "Quarterly Estimates of GDP"

Source: Ministry of Internal Affairs and Communications “CPI”

Source: Ministry of Health, Labour and Welfare “Employment Referrals for General Workers “, Ministry of Internal Affairs and Communications “Labour Force Survey”

Source: Ministry of Finance “Balance of Payments"

Source: Ministry of Economy, Trade and Industry "Indices of Industrial Production”

Source: Cabinet Office, Government of Japan "Orders Received for Machinery"

(trillion yen)

ECONOMIC AND FINANCIAL TRENDS

Source: Bank of Japan "Monetary Base"

Source: Bank of Japan "Tankan"

-14-

English Publications on JGBs Frequency URL Debt Management

Message from the Financial Bureau As needed https://www.mof.go.jp/english/jgbs/debt_management/message.htm

About JGBs As needed https://www.mof.go.jp/english/jgbs/debt_management/guide.htm

About the Debt Management Policy As needed https://www.mof.go.jp/english/jgbs/debt_management/about.htm

JGB Issuance Plan As needed https://www.mof.go.jp/english/jgbs/debt_management/plan/index.htm

Auction Calendar

Auction Calendar Monthly https://www.mof.go.jp/english/jgbs/auction/calendar/index.htm

Historical Data of Auction Results Each Auction https://www.mof.go.jp/english/jgbs/auction/past_auction_results/index.html

Topics

Product Characteristics of the JGB As needed https://www.mof.go.jp/english/jgbs/topics/bond/index.html

Treasury Discount Bills (T-Bills) Annual https://www.mof.go.jp/english/jgbs/topics/t_bill/index.htm

Japanese Government Guaranteed Bonds Annual https://www.mof.go.jp/english/jgbs/topics/gov_guaranteed_bonds/index.htm

Interest Rate Swap Semiannual https://www.mof.go.jp/english/jgbs/topics/swap/index.htm

Taxation of Government Bonds As needed https://www.mof.go.jp/english/jgbs/topics/taxation2016/index.html

For Individual Investors As needed https://www.mof.go.jp/english/jgbs/topics/individual/index.htm

Data

Central Government Debt Quarterly https://www.mof.go.jp/english/jgbs/reference/gbb/index.htm

Interest Rate Daily https://www.mof.go.jp/english/jgbs/reference/interest_rate/index.htm

STRIPS Monthly https://www.mof.go.jp/english/jgbs/reference/jgbstat/index.htm

Dialogue with the market

Advisory Councils on Government Debt Management Each Meeting https://www.mof.go.jp/english/about_mof/councils/gov_debt_management/index.html

Meeting of JGB Market Special Participants Each Meeting https://www.mof.go.jp/english/about_mof/councils/jgbsp/index.html

Meeting of JGB Investors Each Meeting https://www.mof.go.jp/english/about_mof/councils/jgb_investor/index.html

Publications

Debt Management Report Annual https://www.mof.go.jp/english/jgbs/publication/debt_management_report/index.htm

JGB Newsletter Monthly https://www.mof.go.jp/english/jgbs/publication/newsletter/index.htm

Debt Management Policy Division, Financial Bureau, Ministry of Finance 3-1-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8940 Japan

Phone: 81-3-3581-4111 Web: www.mof.go.jp

To subscribe to our Newsletter mailing list, please email: JGB-IR@mof.go.jp

-15-

INFORMATION