The Finance Ministry said Monday it will issue on March 10 the nation's first government bonds targeted specifically at individuals, and the first interest payments of the 10-year floating-rate bonds will be made in September at a coupon rate of 0.09 percent per annum.
Coupon rates will be reset twice a year thereafter, based on auction results of regular 10-year government bonds, and interest payments will also be made twice a year, the ministry said in a statement.
The bonds will carry a floor coupon rate of 0.05 percent to guarantee interest income for investors even if market interest rates plunge sharply.
The ministry, which wants to ensure smooth sales of government bonds, developed the new type of bond in a bid to encourage ownership by individual investors, who hold a mere 2 percent of the some 100 trillion yen in bonds issued a year.
The coupon rate will be reset by subtracting basis points from base rates calculated from the regular 10-year bond auction results.
Orders for the new bonds will be accepted from Feb. 3 to Feb. 21 at private banks, securities houses and post offices. Subscriptions can be made in units of 10,000 yen, and principal and interest payments will be guaranteed by the government.
In the first round, the ministry expects private-sector financial institutions to sell about 300 billion yen of the bonds, while post offices nationwide are expected to sell about 50 billion yen worth of bonds.
For fiscal 2003, the ministry plans to issue bonds totaling 1.2 trillion yen at financial institutions and 300 billion yen at post offices, ministry officials said. The bonds will be issued in four batches. , or every three months starting in April.