The Japanese government bonds (JGBs) have a number of characteristics and benefits as a popular financial product:
1. PAYMENT GUARANTEED BY THE GOVERNMENT
As the name implies, JGBs are the bonds issued by the government of Japan, which is responsible for the interest and principal payments. Interest is paid every six months, and the principal payments are secured at maturity.
2. MATURITY FROM 2 TO 40 YEARS
JGBs are available with various maturity periods. Coupon-bearing bonds, which feature semiannual interest payment and principal payment at maturity, have maturities as below:
- Fixed rate coupon-bearing Bonds: 2, 5, 10, 20, 30 and 40-years
- Inflation-indexed Bonds: 10-years
- Floating-rate Bonds: 15-years
- JGBs for Retail Investors: 3, 5, 10-years
Note： Currently, in the fixed rate coupon-bearing bonds category, 2, 5, 10, 20 and 30-year bonds are issued every month, and 40-year bonds are issued every other month. The first auction for a new Inflation-indexed Bond is planned in October 2013. We are not selling new issue of floating-rate bonds now. We introduced monthly subscription and issuance for 10-Year Floating-Rate and 5-Year Fixed-Rate Bonds for Retail Investors in addition to 3-Year Fixed-Rate Bonds (from December 2013).
3. MARKET VALUE-BASED INTEREST RATES AND YIELDS
The interest rate (nominal coupon rate) of a JGB is basically decided according to its market value on the day of the auction, and will remain unchanged till maturity (except for Floating-Rate). Yield to maturity is calculated based on the purchase price (expressed per ¥100 of the face amount), the nominal coupon rate, and the maturity (the period between purchase and redemption).
4. AVAILABLE AT A MINIMUM FACE VALUE
The unit face values of JGBs are:
10,000 yen: JGBs for Retail Investors (3-Year Fixed-Rate, 5-Year Fixed-Rate, 10-Year Floating-Rate)
50,000 yen: 2, 5, 10, 20, 30, and 40-Ｙear,Treasury Discount Bills
100,000 yen: 10-Year Inflation-Indexed, 15-Year Floating-Rate
There is no upper limit on purchases.
5. CAN BE SOLD IN THE MARKET
JGBs are financial products traded in the market. So, you don’t need to wait for maturity. However, except for JGBs for Retail Investors, please note that the sales price may be higher, or lower, than the original purchase price, depending on the market situation.
Note： When you hold JGBs till maturity, their principal amount will be paid.
For further questions, opinions, or requests on the JGBs, please contact us at :
Ministry of Finance, The Japanese Government/Feed Back