Progress toward Resuming the Issuance of Inflation-Indexed Bonds pot

WHAT’S NEW Progress toward Resuming the Issuance of Inflation-Indexed Bonds Issuance of Inflation-Indexed Bonds (JGBi) ※1 , introduced in March 2004, have been suspended since October 2008, as the Lehman Shock in the same year brought about a significant decline of liquidity in the market through increased needs for cash of the financial institutions as well as prolonged future deflation expectations. In the JGB Issuance Plan for FY2012, the Ministry announced that "practical discussions will be held with market participants on detailed product designs etc. toward resuming the issuance of Inflation-Indexed Bonds". Since February 2012, the Working Group for Resumption of Issuance of Inflation-Indexed Bonds has been held among the market participants and the Ministry. After the series of discussions in the Working Group, the new product designs for resumption have been formulated as follows. ○ New Product Designs of Inflation-Indexed Bonds The principal will be guaranteed at maturity (deflation floor). In case where the indexation coefficient falls below 1 at maturity, the Bonds will be redeemed at the face value. Other features are the same as the existing JGBi ※2※3 . ※1 Inflation-Indexed Bonds are bonds whose principals fluctuate along with price of goods. ※2 The number of decimal points of indexation coefficient will remain to be 3 for the time-being. In response to the request for smoothing the daily transitions of indexation coefficients, however, it will be expanded to 5 at the time when a smooth shift from the current system is deemed to be possible along with the expected full operation of the new BOJ-Net. ※3 The bidding method of the competitive price auctions for the reopened issuances will remain the same as the current method for the time-being; bidders are supposed to tender with prices which are multiplied by the inflation coefficients. In response to the requests that the bidding method should be compromised with the market practice where the bidders tender with the prices without multiplying them by the inflation coefficients, however, it is planned that a potential revision of the bidding method will be discussed soon after the expected full operation of the new BOJ-Net. ○ Timing of Resumption The discussions will be continued at the abovementioned Working Group, the Meeting of JGB Market Special Participants and the Meeting of JGB Investors. The resumption of issuance is then projected with appropriate conditions in place. Ministry of Finance, Japan www.mof.go.jp Quarterly Newsletter of the Ministry of Finance, Japan JAPANESE GOVERNMENT BONDS April 2012 Contents 1 What’s New 2 JGB Primary Market 3 The Auctions for Enhanced-Liquidity and JGB Buy-Back 4 JGB Secondary Market 5 JGB Outstanding 6 Economic and Financial Trends Face Value × × Coupon Rate × Future Product Designs of Inflation-Indexed Bonds １．Maturity：１０years The principal (face value) will be guaranteed at maturity (from issue number 17) ５．Interest Payment： Biannual (Hereinafter referred to as “CPI”) １ ２ ＣＰＩ at Interest Payment ＣＰＩ at Issuance ６．Interest Amount： Inflation-Adjusted Principal ３．Ref Index： Consumer Price Index ２．Features： Pre-fixed coupon rate (increments of 0.1%） The principal fluctuates along with price of goods. ４．Deflation Floor： Indexation Coefficient (Composite index of all items excluding fresh foods) Deflation Floor (Conceptual Diagram) ①In case where the indexation coefficient is below 1, the inflation- adjusted principal will fall below its face value. ②In case where the indexation coefficient at maturity is above 1, the principal and the interest will be paid based on the inflation- adjusted principal per se. ③In case where the indexation coefficient at maturity is below 1, principal will be redeemed at its face value. (Note) Deflation floor has no effect on interests during the maturing p eriod or at maturit y . 1 Indexation Coefficient ② ①③ 10 years Issuance of the Reconstruction Supporters’ Bonds for Retail Investors With a view to encouraging a wide range of public to fund expenditures for reconstruction from the Great East Japan Earthquake, the Ministry started to offer the Reconstruction Bonds for Retail Investors (10-Year Floating-Rate, 5-Year Fixed-Rate and 3-Year Fixed-Rate) since December 2011. In addition, the Ministry has also started to offer the Reconstruction Supporters’ Bonds for Retail Investors with new product characteristics since March 2012 (issued in April). The Reconstruction Supporters’ Bonds for Retail Investors, while based on the basic product features of 10-Year Floating-Rate JGBs for Retail Investors, set a lower interest rate for the first three years (0.05%, the lowest applicable rate in JGBs for Retail Investors) in order to call retail investors who are willing to financially support reconstruction projects from the Great East Japan Earthquake. Newly issued Commemorative Coins for the Great East Japan Earthquake Reconstruction Projects will be given to the bondholders of the Reconstruction Supporters’ Bonds for Retail Investors; a gold coin worth 10,000 yen per balance of the bond holding of 10 million yen, and a silver coin worth 1,000 yen per balance of the bond holding of one million yen as of the interest payment date three years after the issue date of the bonds. The Commemorative Coins for the Great East Japan Earthquake Reconstruction Projects are issued with our wishes that the victims of the disaster would rest in peace and for the fast recoveries from the destruction in the future. It is expected that the issuance of the coins will give momentum to the efforts toward the renaissance of the country through recoveries based on mutual supports and solidarities of the people. The following are the features of the Coins which will be given to the bondholders of the Reconstruction Supporters’ Bonds for Retail Investors (issue number 801), offered in March 2012. The designs of the coins vary depending on the issues (months of issuances). Each issue of the Reconstruction Supporters’ Bonds for Retail Investors is associated with unique designs for the gold and silver coins, respectively. Offering of the next issue of the bonds (issue number 802) is scheduled in June 2012. Denomination 10,000 yen ( Images are one and a half times actual size ) 1,000 yen (Images are actual size) Individual side Reconstruction special areas and pigeons Big fishing boat and ears of rice Common side Solitary pine tree of a Miracle and pigeons Solitary pine tree of a Miracle and pigeons Material Pure gold Pure silver Weight 15.6g（1/2 troy ounce） 31.1g（1 troy ounce） Diameter 26.0mm 40.0mm The Design (image) of the Commemorative Coins for the Great East Japan Earthquake Reconstruction Pro j ects ( First series ) －2－ 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 ) 1/12/2012 10-year 320 12/20/2021 1.0% 5,999.3 2,005.5 0.966% 0.965% 5.931 187.6 327.5 1/17/2012 30-year 35 9/20/2041 2.0% 2,258.3 641.7 1.918% 1.915% - 57.4 13.0 1/19/2012 5-year 102 12/20/2016 0.3% 9,938.9 2,276.8 0.333% 0.333% 2.996 219.6 322.0 1/26/2012 20-year 133 12/20/2031 1.8% 3,178.2 1,005.0 1.745% 1.744% - 93.8 3.4 1/31/2012 2-year 313 2/15/2014 0.1% 13,460.5 2,516.9 0.130% 0.128% 2.399 179.6 271.6 2/ 2/2012 10-year 320 12/20/2021 1.0% 7,439.2 2,000.1 0.964% 0.963% 4.760 194.3 328.2 2/ 9/2012 40-year 4 3/20/2051 2.2% 1,443.9 399.5 2.140% - - - 36.4 2/16/2012 5-year 102 12/20/2016 0.3% 8,924.5 2,296.0 0.297% 0.295% 1.554 201.7 102.9 2/23/2012 20-year 133 12/20/2031 1.8% 2,791.8 1,002.3 1.759% 1.755% - 96.6 0.0 2/28/2012 2-year 314 3/15/2014 0.1% 12,882.6 2,503.9 0.112% 0.111% 1.952 193.2 0.0 3/ 1/2012 10-year 321 3/20/2022 1.0% 6,505.3 1,996.6 0.974% 0.973% 8.912 193.5 230.9 3/ 6/2012 30-year 36 3/20/2042 2.0% 2,544.9 641.6 1.968% 1.964% - 57.4 86.7 3/ 8/2012 5-year 103 3/20/2017 0.3% 8,595.8 2,300.8 0.295% 0.293% 2.584 195.7 0.0 3/15/2012 20-year 134 3/20/2032 1.8% 3,256.4 999.7 1.803% 1.795% - 99.5 27.1 3/29/2012 2-year 315 4/15/2014 0.1% 14,088.5 2,508.7 0.117% 0.117% 1.230 189.1 117.2 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) 1/6/2012 3-month 248 4/9/2012 35,510.82 5,510.41 0.0995% 0.0966% 489.50 1/10/2012 6-month 249 7/10/2012 21,965.00 3,239.40 0.1020% 0.1020% 260.50 1/11/2012 3-month 250 4/16/2012 32,110.00 5,511.35 0.1002% 0.1002% 448.50 1/17/2012 1-year 251 1/21/2013 14,330.20 2,321.46 0.1045% 0.1035% 178.45 1/18/2012 3-month 252 4/23/2012 56,742.50 5,557.43 0.1002% 0.0994% 472.40 1/20/2012 Approx. 2-month 253 3/23/2012 31,651.10 2,324.46 0.0975% 0.0956% 175.45 1/25/2012 3-month 254 4/27/2012 44,926.00 5,649.07 0.1016% 0.1012% 370.78 2/1/2012 3-month 255 5/7/2012 51,965.70 5,568.16 0.1023% 0.1007% 431.63 2/7/2012 6-month 256 8/10/2012 35,143.60 3,227.01 0.1023% 0.1003% 272.80 2/8/2012 3-month 257 5/14/2012 74,912.00 5,510.05 0.1023% 0.1015% 459.80 2/10/2012 Approx. 2-month 258 4/9/2012 28,254.50 2,306.11 0.1014% 0.1007% 193.80 2/13/2012 1-year 259 2/20/2013 11,030.40 2,294.09 0.1048% 0.1038% 205.85 2/15/2012 3-month 260 5/21/2012 41,408.30 5,451.36 0.1023% 0.1015% 508.54 2/22/2012 3-month 261 5/28/2012 47,796.30 5,545.88 0.1043% 0.1035% 473.90 2/29/2012 3-month 262 6/4/2012 58,923.20 5,573.15 0.1043% 0.1039% 426.70 3/6/2012 6-month 263 9/10/2012 34,336.60 3,217.80 0.1026% 0.1026% 282.10 3/7/2012 3-month 264 6/11/2012 73,424.80 5,556.28 0.1043% 0.1027% 483.54 3/14/2012 3-month 265 6/18/2012 45,700.70 5,595.05 0.1023% 0.1023% 404.87 3/15/2012 1-year 266 3/21/2013 10,401.40 2,345.77 0.1041% 0.1031% 154.10 3/19/2012 Approx. 2-month 267 5/25/2012 26,419.40 2,296.40 0.1014% 0.1008% 203.50 3/21/2012 3-month 268 6/25/2012 46,414.70 5,499.18 0.1023% 0.1019% 490.70 3/23/2012 3-month 269 7/2/2012 39,200.30 5,517.03 0.1018% 0.1018% 512.90 Auction Calendar for Apr. – Jun. 2012 Auction Date Issue Auction Date Issue Auction Date Issue Auction Date Issue 4/ 3 (Tue) 10-year 4/24 (Tue) T-Bills(3-month) 5/17 (Thu) 5-year 6/ 7 (Thu) 30-year 4/ 4 (Wed) T-Bills(3-month) 4/24 (Tue) 20-year 5/22 (Tue) T-Bills(Approx.2-month) 6/12 (Tue) 5-year 4/ 5 (Thu) T-Bills(6-month) 4/26 (Thu) T-Bills(3-month) 5/22 (Tue) Auction for Enhanced-liquidity 6/13 (Wed) T-Bills(Approx.2-month) 4/ 5 (Thu) Auction for Enhanced-liquidity 4/26 (Thu) 2-year 5/24 (Thu) T-Bills(3-month) 6/14 (Thu) T-Bills(3-month) 4/ 9 (Mon) T-Bills(Approx.2-month) 5/ 8 (Tue) 10-year 5/24 (Thu) 20-year 6/14 (Thu) 20-year 4/11 (Wed) T-Bills(3-month) 5/ 9 (Wed) T-Bills(6-month) 5/29 (Tue) 2-year 6/18 (Mon) T-Bills(1-year) 4/12 (Thu) 30-year 5/10 (Thu) T-Bills(3-month) 5/31 (Thu) T-Bills(3-month) 6/21 (Thu) T-Bills(3-month) 4/17 (Tue) T-Bills(1-year) 5/10 (Thu) Auction for Enhanced-liquidity 6/ 1 (Fr i) Auction for Enhanced-liquidity 6/21 (Thu) Auction for Enhanced-liquidity 4/17 (Tue) 5-year 5/15 (Tue) 40-year 6/ 5 (Tue) 10-year 6/26 (Tue) 2-year 4/18 (Wed) T-Bills(3-month) 5/16 (Wed) T-Bills(1-year) 6/ 6 (Wed) T-Bills(6-month) 6/28 (Thu) T-Bills(3-month) 4/19 (Thu) Auction for Enhanced-liquidity 5/17 (Thu) T-Bills(3-month) 6/ 7 (Thu) T-Bills(3-month) Total Bidding Amount of JGBs （Calculated by Duration） Top 10 （Oct. 2011 ～ Mar. 2012） 1 Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. 6 Daiwa Securities Co., Ltd. 2 Nomura Securities Co., Ltd. 7 Barclays Capital Japan Limited 3 Goldman Sachs Japan Co., Ltd. 8 Deutsche Securities Inc. 4 The Bank of Tokyo-Mitsubishi UFJ, Ltd. 9 RBS Securities Japan Limited 5 Mizuho Securities Co., Ltd. 10 JPMorgan Securities Japan Co., Ltd. 2 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 the Treasury Discount Bills auctioned on April 9, 2012 is April 13, 2012, and the maturity date is June 4,2012. Note 4: The issue date of the Treasury Discount Bills auctioned on May 22, 2012 is May 25, 2012, and the maturity date is July 25,2012. Note 5: The issue date of the Treasury Discount Bills auctioned on June 13, 2012 is June 15, 2012, and the maturity date is August 2,2012. －3－ Issues Re-opened through the Recent Auctions for Enhanced-Liquidity Issue Numbers Auction Date Securities Re-opened Amounts（billion yen. face value） ＃287 ＃290 ＃291 ＃292 ＃293 ＃294 ＃295 ＃302 ＃311 ＃312 ＃61 3/27/ 2012 10-year 20-year 0.4 9.7 32.5 0.5 8.2 5.0 61.3 0.4 170.5 10.0 0.5 ＃101 ＃102 ＃111 ＃11 6 ＃122 ＃126 ＃128 ＃129 ＃4 ＃5 ＃7 ＃8 ＃15 ＃16 ＃17 ＃18 ＃20 ＃22 ＃26 3/22/ 2012 20-year 30-year 5.0 6.9 10.0 12.0 10.3 24.5 26.5 20.0 8.0 0.9 3.0 7.0 0.6 114.2 0.2 30.7 4.0 10.7 4.9 ＃290 ＃291 ＃295 ＃300 ＃308 ＃311 ＃316 ＃55 ＃57 ＃58 ＃60 ＃61 ＃68 ＃70 ＃74 ＃87 ＃88 2/21/ 2012 10-year 20-year 88.2 7.3 1.1 10.0 26.0 90.1 4.0 2.9 15.1 0.1 9.7 15.2 4.9 0.2 2.0 21.5 0.1 ＃125 ＃4 ＃7 ＃8 ＃9 ＃11 ＃13 ＃16 ＃17 ＃18 ＃19 ＃20 ＃21 ＃22 ＃24 ＃25 ＃26 ＃31 ＃32 2/7/ 2012 20-year 30-year 5.0 7.7 29.1 26.5 1.0 1.0 11.1 0.6 20.0 78.0 0.6 9.2 16.5 62.5 6.0 12.1 1.3 1.0 10.3 ＃287 ＃291 ＃300 ＃302 ＃306 ＃316 ＃55 ＃58 ＃62 ＃67 ＃76 ＃82 ＃87 ＃91 ＃94 1/23/ 2012 10-year 20-year 82.8 7.6 93.8 14.3 2.2 62.7 11.7 2.0 0.5 4.6 1.0 0.5 12.9 2.0 0.5 ＃125 ＃7 ＃8 ＃11 ＃13 ＃14 ＃15 ＃17 ＃18 ＃20 ＃21 ＃26 ＃32 1/6/ 2012 20-year 30-year 18.7 13.0 25.0 0.5 51.4 81.9 3.0 29.5 16.0 5.5 38.9 15.0 1.0 Note：Red shows 10-year, black shows 20-year and blue shows 30-year coupon-bearing bonds. Target Zones of the Auction for Enhanced-Liquidity for the First Quarter of FY 2012 JGB Buy-Back Results Remaining Years to Maturity ～1yr 1yr～5yr 5yr～10yr 10yr～20yr 20yr～ Coupon STRIPS Total March 2012 - 439.3 260.3 1.0 - - 700.6 February 2012 - 35.0 135.5 - - - 170.5 January 2012 - 56.1 206.9 30.7 - - 293.7 Note：Figures include JGB Buy-back from the Bank of Japan. 3 THE AUCTIONS FOR ENHANCED-LIQUIDITY AND JGB BUY-BACK （billion yen） 0.0 500.0 1,000.0 1,500.0 2,000.0 2,500.0 ～1Y 1Y～5Y 5Y～10Y 10Y～20Y 20Y～ Jan. to Mar. 2012 Oct. to Dec. 2011 Jul. to Sep. 2011 Apr. to Jun. 2011 624.4 （ years to maturity ） （billion 876.4 2,359.6 185.3 601.0 121.2 161.3 63.5 530.4 36.9 31.7 60.3 56.4 531.5 602.7 －4－ Note1： JL shows 20‐year JGBs. JX shows 30‐year JGBs. Outstanding amount is as of the end of March 2012. Note2： Based on the result of the consultation to the JGB Market Special Participants which takes place at the time of each auction, 60 issues from each of the above 2 groups are selected as targeted issues (excluding JL56,57 from ① and JX7 from ② for the auctions in June,respectively). 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 7,500 288 JL36 JL37 289 290 291 292 JL38 JL39 293 294 295 296 JL40 297 298 299 300 JL41 JL42 301 302 303 304 JL43 305 306 307 JL44 JL45 308 309 JL46 310 311 JL47 312 JL48 313 314 JL49 JL50 315 316 JL51 317 318 JL52 JL56 JL57 JL58 JL59 JL60 JL61 JL62 JL63 JL64 JL65 JL66 JL67 JL68 JL69 JL70 JL71 JL72 JL73 JL74 JL75 JL76 JL77 JL78 JL79 JL80 JL81 JL82 JL83 JL84 JL85 JL86 JL87 JL88 JL89 JL90 JL91 JL92 JL93 JL94 JL95 JL96 JL97 JL98 JL99 (billion yen) Outstanding amount in the market (excluding amount issued by the Auction for Enhanced-Liquidity) Amount issued by the Auction for Enhanced-Liquidity 0 500 1,000 1,500 2,000 2,500 3,000 3,500 JL100 JL101 JL102 JL103 JL104 JL105 JL106 JL107 JL108 JL109 JL110 JL111 JL112 JL113 JX01 JL114 JL115 JX02 JL116 JL117 JX03 JL118 JL119 JL120 JL121 JL122 JX04 JL123 JL124 JL125 JL126 JL127 JX05 JL128 JL129 JL130 JL131 JX06 JX07 JX08 JX09 JX10 JX11 JX12 JX13 JX14 JX15 JX16 JX17 JX18 JX19 JX20 JX21 JX22 JX23 JX24 JX25 JX26 JX27 JX28 JX29 JX30 JX31 JX32 JX33 JX34 JX35 (billion yen) Outstanding amount in the market (excluding amount issued by the Auction for Enhanced-Liquidity) Amount issued by the Auction for Enhanced-Liquidity 5.5 9.5 12 15.5 29.5 19.5 15.5 (Remaining maturities) (Remaining maturities) ②Remaining maturity : approx.15‐～29‐year ①Remaining maturity : approx.5‐～15‐year 4 JGB SECONDARY MARKET JGB Yield Curves Source: Japan Bond Trading Co. Yields of JGB Long - Term Interest Rates （10Yr） Source: Japan Bond Trading Co. Long - Short Interest Spreads （30Yr - 10Yr） Source: Bloomberg Source: Bloomberg (years to maturity) －5－ 0.0 0.5 1.0 1.5 2.0 2.5 2011/12/30 2012/3/30 40353020 25 151050 (%) -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 United Kingdom Germany United States Japan （％） <2008> <2009> <2010> <2011> <2012> -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 United Kingdom Germany United States Japan （％） <2008> <2009> <2010> <2011> <2012> 0.0 0.5 1.0 1.5 2.0 2.5 3.0 （ % ） 40-year bond 10-year bond 30-year bond 5-year bond 20-year bond 2-year bond <2008> <2009> <2010> <2011> <2012> Break-Even Inflation Rates Source: Japan; Japan Bond Trading Co., U.S., U.K.; Bloomberg Short-Term Interest Rates of Treasury Discount Bills Short-Term Interest Rates Note: The Interest rates of FBs (13-weeks, 6-months) and TBs (6-months, 1-year) are used up till Jan. 2009. Source: Japan Bond Trading Co. Source: Bank of Japan, Japan Bankers Association JGB Over-the-Counter Trading Volume (TOKYO) Note: In February 2009, FBs (approx 2-month, 13-weeks, 6-months) and TBs (6-months, 1-year) are integrated into the Treasury Discount Bills. Source: Japan Securities Dealers Association －6－ 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 Treasury Discount Bills (3-month) Treasury Discount Bills (6-month) Treasury Discount Bills (1-year) （％） 2012/3/30 Recent Indicative Price Treasury Discount Bills (3-month) 0.100% Treasury Discount Bills (6-month) 0.100% Treasury Discount Bills (1-year) 0.100% <2010> <2012> <2008> <2009> <2011> -0.05 0.05 0.15 0.25 0.35 0.45 0.55 0.65 0.75 0.85 0.95 Call Rate (Uncollateralized Overnight) TIBOR 3-months (Euro-Yen) Basic Loan Rate <2012> <2008> <2009> <2010> <2011> (%) -3.5 -3.0 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 10-yr BEI (Japan) 10-yr BEI (U.K.) 10-yr BEI (U.S.A.) （％） <2008> <2009> <2010> <2011> <2012> 0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 Treasury Discount Bills Financing Bills Treasury Bills Medium Term Bonds Long Term Bonds <2008> <2009> <2010> <2011> (trillion yen) <2012> 5 JGB OUTSTANDING Note: Outs t anding STRIPS means outstanding amount of principal o f strippable JGBs held in stripped form. Source: Ministry of Finance General Bonds Issuance Amount and Outstanding Time-to-Maturity Structure of Outstanding JGB （December 2011） Source: Ministry of Finance Outstandin g STRIPS Note 1: Issuance Amount: revenue basis, F Y 2000-2010: actual, FY2011: fourth supplementary budget, FY2012: initial budget. Note 2: Outstanding: nominal basis, FY2000-2010: actual, FY2011-FY2012: estimates. Source: Ministr y of Finance Breakdown by JGB Holders （December 2011,QE） Note1 : "JGB" includes FILP Bonds, does not include T -Bills. Note2 : "Banks, etc" includes Japan Post Bank, "Securities investment trust" and "Securities Companies" Note3 : "Life and Nonlife insurance" includes Japan Post Insurance. Source: Bank of Japan Holding of JGBs by Foreign Investors JGB Holding by Retail Investors Source: Bank of Japan Note: Outstanding "JGBs f or retail investors" at March-12 is calculated to 〔 aggregate issues of ¥36.3 trillion〕-〔redemption before maturity of ¥8.5 trillion〕-〔aggregate redemption money of ¥4.9 trillion〕. Other figures based on Bank of Japan “Flow of Funds” statistics. Source: Ministr y of Finance, Bank of Ja p an (trillion yen) －7－ 708.9 421.1 636.3 594.0 545.9 675.5 541.5 531.7 526.9 499.0 457.0 392.4 367.6 142.4 127.1 124.6 135.6 136.8 119.9 110.3 104.6 89.3 86.3 143.1 165.0 159.2 0 25 50 75 100 125 150 175 00 01 02 03 04 05 06 07 08 09 10 11 12 (FY) 100 200 300 400 500 600 700 800 Outstanding (right-hand scale) Issuance Amount (left-hand scale) (trillion yen) (trillion yen) 16.7 20.0 19.2 23.6 25.6 26.8 40.9 38.4 34.4 31.0 50.9 49.0 43.2 36.6 35.8 37.6 33.3 32.4 30.2 31.2 30.0 34.9 34.4 37.1 41.4 37.8 43.1 47.7 47.4 47.6 53.9 44.8 43.6 3.0% 3.5% 3.3% 3.9% 4.1% 4.2% 4.9% 4.6% 4.6% 4.5% 5.3% 5.1% 5.5% 6.1% 5.7% 6.4% 7.0% 6.8% 7.0% 5.7% 4.6% 4.7% 5.0% 6.5% 6.7% 5.8% 4.9% 5.2% 5.1% 7.9% 6.4% 6.4% 6.1% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% Dec-03 Sep-04 Jun-05 Mar-06 Dec-06 Sep-07 Jun-08 Mar-09 Dec-09 Sep-10 Jun-11 0.0 10.0 20.0 30.0 40.0 50.0 60.0 (trillion yen) 1.29 1.25 1.23 2.30 5.38 4.20 2.97 3.42 2.53 2.67 1.43 4.70 0.73 2.14 8.58 7.03 57.40 9.23 7.49 28.48 72.84 30.89 22.65 13.53 14.26 32.91 111.94 37.18 9.19 57.72 32.08 7.05 9.54 10.51 45.65 0 10 20 30 40 50 60 70 80 90 100 110 120 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 47484950 (FY) (trillion yen ） Treasury Bills 2-yr bonds JGBs for retail investors (3-yr-Fixed-rate) JGBs for retail investors (5-yr-Fixed-rate) 5-yr bonds Inflation-Indexed bonds JGBs for retail investors (Floating-rate) 10-yr bonds 15-yr-floating-rate bonds 20-yr bonds 30-yr bonds 40-yr bonds Average remaining years to maturity： 6 years and 11 months 0.0 100.0 200.0 300.0 400.0 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 STRIPS(2-year bonds) STRIPS(5-year bonds) STRIPS(10-year bonds) STRIPS(20-year bonds) STRIPS(30-year bonds) STRIPS(40-year bonds) (billion yen) 3.3 4.8 6.5 8.4 10.1 12.4 14.0 15.3 17.1 20.7 22.0 23.2 24.1 25.8 26.5 26.7 26.8 27.4 27.5 27.6 27.5 27.7 27.7 27.2 27.3 27.4 27.2 25.8 25.2 24.1 23.4 22.9 12.7 12.5 12.4 13.4 14.6 15.9 18.0 20.1 21.8 24.5 25.7 26.9 28.0 29.1 31.4 32.3 33.4 33.6 35.4 36.0 36.3 35.3 35.8 36.7 36.0 35.6 35.5 35.0 34.4 34.4 34.1 33.0 31.1 30.4 29.5 28.5 2.0 18.7 0.4 0.7 1.0 4.3% 4.1% 3.9% 3.8% 4.5% 4.7% 4.9% 5.0% 5.2% 5.2% 5.3% 5.3% 5.3% 5.2% 5.2% 5.2% 5.3% 4.8% 3.4% 3.2% 4.0% 3.7% 3.9% 2.4% 2.3% 2.4% 4.2% 4.7% 4.4% 2.3% 2.6% 2.8% 3.0% 5.0% 5.1% 5.3% 0 5 10 15 20 25 30 35 40 45 Mar - 03 Mar - 04 Mar - 05 Mar - 06 Mar - 07 Mar - 08 Mar - 09 Mar - 10 Mar - 11 Mar - 12 -0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 5.5% Total JGBs held by retail investors (left) Outstanding "JGBs for retail investors" (left) Ratio of JGBs held by retail investors （right） (trillion yen) Households 28.5 3.8% Foreigners 50.9 6.7% Pension Funds 28.5 3.8% Public Pensions 69.7 9.2% Life and Nonlife Insurance 169.1 22.4% Banks, etc. 312.7 41.4% Fiscal Loan Fund 0.8 0.1% BOJ 67.6 9.0% Others 25.8 3.4% General Government (ex Public Pensions) 1.8 0.2% 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 ○ This printed matter was prepared using the paper that satisfies the judgment criteria of the basic policy under the Law Concerning the Promotion of Procurement of Eco-Friendly Goods and Services by the State and Other Entities (Law on Promoting Green Purchasing). ○ Indication of the recyclability : Recyclable to paper This printed matter was prepared using only the material fit for recycling to printing papers(Rank A) according to the judgment criteria“printing”of the basic policy under the Green Purchasing Law FY2010 FY2007 FY2008 FY2009 FY2010 Apr Jun. Jul Sep. Oct Dec. Real GDP（chained 2005） 1.8 -3.7 -2.1 3.1 -0.3 1.7 -0.2 Domestic Demand （0.6） (-2.7） (-2.2) (2.4） (0.7） （1.0） (0.5) Private Consumption 0.8 -2.0 1.2 1.5 0.3 1.0 0.4 Residential Investment -14.5 -1.1 -21.0 2.3 -2.4 4.5 -0.7 Non-Resi. Investment 3.0 -7.7 -12.0 3.5 -0.1 0.3 4.8 Public Investment -4.9 -6.7 11.5 -6.8 6.6 -1.6 -2.2 Net Exports （1.2） (-1.1） (0.2) （0.8） （-1.0） (0.8） (-0.6) Index of Industrial Production (2005 av.=100) 2.7 -12.7 -8.8 8.9 -6.8 -2.1 -2.8 Unemployment Rate 3.8 4.1 5.2 5.0 4.6 4.4 4.5 （％） 6 ECONOMIC AND FINANCIAL TRENDS We will send a notice to you by e-mail when new information is updated on our website. For use of this service, please visit our website and register. (http://www.mof.go.jp/english/ehaisin/etop.htm) Note: Percent changes from previous period (quarterly figures are seasonally adjusted). The figures in（ ）indicate the contribution to change in GDP. Source: Cabinet Office; Ministry of Internal Affairs and Communications; Ministry of Economy, Trade and Industry Source: Cabinet Office, Ministry of Internal Affairs and Communications, Bank of Japan Source: Ministry of Finance Note: For Japan and the U.S.A., where pension systems are based on a Modified Funded System, the figures exclude social security funds, which are regarded as future liabilities in real terms Source: OECD “Economic Outlook No. 90” Sou r ce: OECD “Economic Outlook No. 90” Prices Debt Securities Investment in Japan by Non-Residents General Government Financial Balances （SNA Basis） General Government Gross Debts （SNA Basis） Economic Indicators －8－ -14.0 -12.0 -10.0 -8.0 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Japan U.S.A. U.K. Germany France Italy Canada （CY） （％） （As a percentage of GDP ） 30 50 70 90 110 130 150 170 190 210 230 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Japan U.S.A. U.K Germany France Italy Canada （ CY ） （％） (As a percentage of GDP) -9.0 -7.0 -5.0 -3.0 -1.0 1.0 3.0 5.0 7.0 9.0 （％） CGPI(Corporate Goods Price Index) CPI (Nationwide, excluding fresh food, including energy prices) GDP Deflator Change from the previous year 0.6% 0.1% -1.8% <2010> <2011> <2007> <2008> <2009> -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 (trillion yen) Money Market Instrument Net Bonds and Notes Net <2007> <2008> <2009> <2010> <2011> . WHAT’S NEW Progress toward Resuming the Issuance of Inflation-Indexed Bonds Issuance of Inflation-Indexed Bonds (JGBi) ※1 , introduced. designs etc. toward resuming the issuance of Inflation-Indexed Bonds& quot;. Since February 2012, the Working Group for Resumption of Issuance of Inflation-Indexed