The Ministry of Finance plans to reduce government bond sales to ¥190 trillion ($1.44 trillion) in the fiscal year beginning April 1, with cuts in the amount of short-term debt sold, according to a draft of the plan.
That number compares with the current year's ¥198.6 trillion, when extra Japanese government bonds (JGB) were sold to fund efforts to cope with an economic downturn triggered by the COVID-19 pandemic.
Several rounds of heavy fiscal stimulus to respond to the fallout of pandemic pushed up JGB market issuance to a record ¥221.4 trillion in the last fiscal year ended March 31.
While targeting Treasury discount bills for cuts in JGB sales, the government would keep coupon-bearing bonds such as with maturities of 2-, 5-, 10-, 20-, 30- to 40-years unchanged from the previous year, the draft plan showed.
Extending durations of JGBs while cutting short-term bonds would help enhance a fragile debt structure that is vulnerable to fluctuations in interest rates. Short-term bonds account for around one third of overall calendar-based debt issuance.
By duration, some ¥34.8 trillion of two-year bonds would be sold, and with 5-year bonds expected to raise 30 trillion, the draft showed.
The 10-year bonds, which serve as benchmark index for long-term rates, would raise ¥32.4 trillion in sales. Some ¥14.4 trillion would be raised with 20-year bonds, and ¥10.8 trillion via 30-year bonds, it showed.
The 40-year bonds, issued once every two months, would be sold to raise ¥4.2 trillion over the fiscal year, while liquidity enhancement auctions would raise a further ¥12 trillion for the next fiscal year.