2018
Debt Management Report
The Government Debt Management and the State of Public Debts
Contents
Preface
■ 1 About “Debt Management Report”2
■ 2 What is Debt Management Policy 3
(1) Overview3
(2) Framework of “Government Funding Activities” 4
(3) Debts with Public Characteristics 5
JGB Yields 7
IFY2018 Debt Management Policies
■ 1 Trends of JGB Market in FY2017 10
(1) Review 10
(2) Yen Bond Market Environment Changes 12
■ 2 JGB Issuance Plan for FY2018 14
(1) Announcement of JGB Issuance Plan for FY2018 14
(2) Overview of Discussions at Various Panels 14
(3) Scheduled Issuance Amount of JGBs15
(4) JGB Issuance Plan Based on Market Trends and Needs 18
JGB Issuance Status and Medium- to Long-Term Outlook
(Importance of Stable and Transparent Issuance) 21
“Revenue from JGB Issuance at a Price above Par Value”
in Low Interest Rate Environment 23
■ 3 Diversifcation of JGB Investor Base 24
(1)JGB Holdings by Retail Investors 25
(2)JGB Holdings by Foreign Investors 27
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IIFramework of Debt Management
◆Chapter 1 Government Bonds (JGBs)
■ 1 Primary Market for Government Bonds 34
（1） JGBs by Legal Grounds of Issuance 34
（2） Types of JGBs 38
（3） Methods of Issuance 40
（4） JGB Market Special Participants Scheme 45
（5） Government Bond Administration 47
Column4 Debt Management Policies in Foreign Countries 49
Column5 Shortening of Settlement Cycles in Primary JGB Market 57
■ 2 Secondary Market for Government Bonds 60
（1） OTC Transactions and Transactions on the Stock Exchange 60
（2） Improvements to the JGB Transaction Settlement System 61
（3） WI Transaction 65
（4） Bond
Gensaki
and Bond-Lending Transaction 66
（5） STRIPS 68
（6）JGB Futures Trading 69
Column6 Introduction of GC repos under Subsequent Collateral Allocation Method 71
■ 3 Debt Management Systems 73
（1） Redemption System 73
（2） Liquidity Enhancement Auctions 81
（3） Buy-back Program 84
（4） Interest Rate Swap Transaction 86
（5） Dialogue with Market Participants 86
JGB Market Liquidity 88
OECD Discussions on How to Enhance Government Bond Market Liquidity 89
■ 4 Taxation of Government Bonds 91
（1） Individuals (residents) 91
（2） Domestic Corporations 92
（3） Nonresident Individuals and Foreign Corporations 93
（4） Tax Exemption Scheme for Nonresident Individuals and Foreign Corporations 93
◆ Chapter 2 Financing Bills, Borrowings, Government-Guaranteed
Debt and Subsidy Bonds
■ 1 Financing Bills 97
（1） Legal Grounds of Financing Bills 97
（2） Status of Financing Bills in the Budget 97
（3） Auction Methods, etc. 98
（4） Outline of Cash Management of the National Treasury 98
■ 2 Borrowings 99
（1） Legal Grounds of Borrowings 99
（2） Status of Borrowings in the Budget 99
（3） Source of Borrowings 99
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（4） Borrowings from the Private Sector 100
（5） Borrowing through Public Auction on Private-sector Borrowings101
■ 3 Government-Guaranteed Debt102
（1） Legal Ground of Government Guarantee 102
（2） Features of Government-Guaranteed Debt 102
（3） Treatment in the Budget and Examination Process102
■ 4 Subsidy Bonds 105
（1） Subsidy Bonds (narrowly defned) 105
（2） Subscription/Contribution Bonds 105
（3） Others 105
◆Chapter 3 Other Public Debt
■ 1Local Government Bonds (LGBs) 107
（1） Basic Scheme of LGBs 107
（2） LGB Program109
■ 2 Debt of Incorporated Administrative Agencies, etc. 111
（1） Debt of Incorporated Administrative Agencies, etc. 111
（2） Financial Conditions of Incorporated Administrative Agencies, etc.112
IIIAppendices
◆Chapter 1 Government Bonds (JGBs)
■ 1 Primary Market for Government Bonds 114
（1） Issuance Amount of Government Bonds114
（2） Changes in JGB Market Issuance 115
（3） Auction Results for JGBs and T-Bills in FY2017 116
（4） Issuance Amount of JGBs and T-Bills Ofered to the Market at Each Auction119
（5） Principal/Coupon Payment Corresponding to Days of Issuance in FY2018120
（6） Closing Bids Share for JGBs by Investor Type in FY2017121
（7） Issuance of JGBs for Retail Investors122
（8） Issuance by the Bank of Japan Rollover123
（9） Front-Loading Issuance of Refunding Bonds123
（10） List of Commissions for Issuing JGBs, etc.124
■ 2 Secondary Market for Government Bonds 125
（1） 10-Year JGB Yield 125
（2） 10-Year Government Bonds Yields 125
（3） Yields of JGBs in FY2017 126
（4） JGB Yield Curves 126
（5） Various Rates in the Short-term Financial Market in FY2017 127
（6） Break-Even-Infation (BEI) Rate127
（7） Market Price of 15-Year Floating-rate Bonds 128
（8） JGB Share in Total Trading Volume of Yen Bonds128
（9） JGB Share in Total Issuance Amount of Yen Bonds 129
（10） Portfolio Investment Assets in FY2017130
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