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With their AAA credit ratings and higher yields than Japanese government bonds, debt instruments issued by the World Bank are seeing growing demand in Japan, especially as the April 1 end of a blanket guarantee on bank deposits might prompt individuals to shift their funds from deposits to government bonds, investment trusts or foreign securities.

Sales of World Bank bonds have risen sharply here since a Dec. 1 revision of the Securities and Exchange Law enabled banks to conduct brokerage business for stocks and bonds, making it easier for individual investors to buy the financial instruments.

Sumitomo Mitsui Banking Corp. says it has sold 50 billion yen to 60 billion yen worth of World Bank bonds — known in Japan as “seginsai” — in the last three months, making them the top-selling foreign securities among individual investors.

Three-year or four-year dollar-denominated World Bank bonds with yields of 3 percent are the best-selling issues in Japan, where depositors — who benefit little from razor-thin interest rates — are looking for higher returns from their assets, according to the major bank.

UFJ Bank and Bank of Tokyo-Mitsubishi have also seen brisk sales of World Bank bonds since they began intermediating them in December.

World Bank officials say the Washington-based development institution raises $12 billion to $15 billion a year in capital markets in some 10 currencies, including the euro, yen and Australian and New Zealand dollars. Yen-denominated bonds, however, are not available to individual investors as they are issued solely to institutional investors.

Graeme Wheeler, vice president and treasurer of the 184-member World Bank, welcomes the rising demand for World Bank bonds in Japan, saying, “It’s a reflection, I think, of the way in which the Japanese public supports the World Bank and development objectives of the World Bank.”

Wheeler expects World Bank bonds to draw even greater demand from the Japanese public in the runup to or even after the abolition of unlimited refund guarantees on liquid deposits.

“With the sort of reform that you are seeing on Dec. 1, and the fact that the deposit insurance will be removed in essence for holdings over $100,000 on April 1, I think that will lead to investors looking around for different ways to get greater returns out of their assets,” Wheeler said during his recent visit to Tokyo.

The revision of the Securities and Exchange Law was also intended to spur securities markets by having individual financial assets held in savings flow into the markets.

“If you look at household financial assets here, there are essentially around 1.4 quadrillion yen, and the amount that is held in cash and deposits is over 700 trillion yen, and these are just enormous figures,” Wheeler, a former deputy secretary of the New Zealand Treasury, told Kyodo News.

“At the moment, of the 700 trillion yen that is held in cash and deposits, it’s only 0.6 or 0.7 percent, or 1 percent, that is held in foreign currency. That is extremely small,” he said, expressing hope that an increasing number of Japanese will start investing in foreign securities, including World Bank bonds.

Japan already has a “significant portion” of some $100 billion in the outstanding balance of World Bank securities, he said, without elaborating.

The Dec. 1 revision of the law has led Japan’s brokerages houses to team up with regional banks to sell World Bank bonds extensively.

Credit analysts give high grades to World Bank securities, but urge prospective investors to take into account exchange rate risks and less trading liquidity than Japanese government bonds and U.S. Treasuries.

“One has to say it’s not a zero-risk investment, but it’s a low-risk investment,” said George Johnston, director for public sector credit research at Barclays Capital in London.

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