Mizuho Corporate Bank said Thursday it will cut its long-term prime lending rate by 0.05 percentage point to a record low 1.35 percent per year.
The move will take effect Friday.
Mizuho said it will keep its short-term prime rate unchanged at 1.375 percent per annum, creating a rare scenario in which the short-term lending rate is higher than the long-term rate.
Scenarios of this nature last materialized in Japan between 1990 and 1991.
This marks the fourth straight month for Mizuho to cut its long-term prime rate, which is the interest rate charged on loans of more than one year extended to its most creditworthy corporate clients.
Mizuho sets the long-term rate 0.9 percentage point higher than the coupon on five-year bank debentures.
The bank's decision follows a decline in yields on its debentures amid recent slides in government bond yields induced by steady inflows of investment funds into the government bond market, officials at the bank said.
Shinsei Bank and Aozora Bank are expected to follow suit.