What’s New: T+1 has started p. 2-4 On May 1, 2018, the T+1 JGB settlement cycle has started successfully.

Under this new cycle, all domestic transactions have settlement on the next business day of the contract day in principle.

We summarize the changes with some specific examples.

Monthly Topic: Wage growth and increasing foreign tourists to Japan p. 5 Following this year’s annual wage negotiation known as “Shunto” (the “Spring

Offensive”), the average monthly wage will increase by 2.54% in large enterprises (Keidanren survey) and by 2.10% in all enterprises (Rengo survey). The paces of wage growth have accelerate.

The number of foreign visitors to Japan rose 19.9% in FY2017 to 29.8 million. In Balance of Payment Statistics, the item “Travel”, which is the difference between the amounts paid by travelers to Japan and Japanese travelers abroad, achieved a surplus of 178.3 billion yen in February 2018.

IR Office: To Kyoto p. 6 Our IR activities: We visited Kyoto and made a presentation.

(Statistics) JGB Primary Market … p. 7 Liquidity Enhancement Auctions and JGB Buy-Back … p. 8

JGB Secondary Market … p. 9 Investor Trends and JGB Outstanding … p. 11

Economic and Financial Trends … p. 15 Information … p. 16

Monthly Newsletter of the Ministry of Finance, Japan JAPANESE GOVERNMENT BONDS

SUMMARY

The Ministry of Finance www.mof.go.jp

Our fundamental goal of debt management policy is to achieve stable and smooth financing for our national accounts and to minimize medium-to-long term financing costs.

May 2018

-1-

T+1 JGB settlement cycle has started on May 1, 2018 On May 1, 2018, the T+1 JGB settlement cycle has started successfully. Under this new cycle,

you have settlement on the next business day of the contract day in principle. We summarize the new cycle below.

Overview of shortening of settlement cycle of JGB

Settlement date

On and after May 1, 2018 Before May 1, 2018

Secondary Market T+1

(1 business day after contract) T+2

(2 business days after contract)

Primary Market

General rule T+1

(1 business day after auction) T+2

(2 business days after auction) Interest-bearing bonds

(5-30 Years) issued in March, June, September or December

T+1 (1 business day after auction)

20th day of auction month (following day if 20th day is holiday)

2 Year bonds 1st day of next month of auction

(following day if 1st day is holiday) 15th day of next month of auction

(following day if 15th day is holiday)

* The above table is not changed from that shown in the November 2017 JGB Newsletter.

For better understanding of the new cycle, let us look at some examples below. Almost all settlement dates are 1 business day after contract or auction dates (Hypothetical Example 1 and 2). One exception is 2-Year bonds issued in auctions (Hypothetical Example 3). In addition, please pay attention to holidays in the Japanese market, which are often different from those in other major markets (e.g. NY, London, Hong Kong, Singapore, etc.).

*All transactions in the examples are supposed to be domestic transactions. [Hypothetical Example 1: Secondary Market] Investor A purchases JB350 (10-Year JGB, Issue Number =350). - Contract date: May 1, 2018 - Settlement date: May 2, 2018 [Hypothetical Example 2: Primary Market, General rule] Primary Dealer B purchases JB350 in an auction in May 2018. - Auction date: May 8, 2018 - Settlement date: May 9, 2018 [Hypothetical Example 3: Primary Market, 2-Year bonds] Primary Dealer B purchases JN390 (2-Year JGB, Issue number = 390) in an auction in June. - Auction date: June 28, 2018 - Settlement date: July 2, 2018

(Note: July 1, 2018 is Sunday.)

What’s new

-2-

The auction timetable is also changed as below. New auction timetable (1) Coupon-bearing JGB

Order Administrative work details On and after May 1, 2018 Comparison with

the past (minutes)

Before May 1, 2018

Implementation day Implementation time Implementation day Implementation time

1 Offer

T day

(auction, new

records)

10:30 -

T day

(auction)

10:30

2 Bidding deadline 11:50 -10 12:00

3 Announcement of auction

12:35 -10 12:45

4 Notification of accepted bids 15:00 -60 16:00

5 Inputting new records -17:00 T+1 day

(new records) 8:30-15:00

6 Payment T+1 day

(issuance) 8:30-15:00

T+2 day

(issuance) 8:30-15:00

(2) Coupon-bearing JGB (Non-Price Competitive Auction II)

Order Administrative work details On and after May 1, 2018 Comparison with

the past (minutes)

Before May 1, 2018

Implementation day Implementation time Implementation day Implementation time

1 Offer

T day

(auction, new

records)

14:00 -

T day

(auction)

14:00

2 Bidding deadline 14:30 - 14:30

3 Announcement of auction

15:15 - 15:15

4 Notification of accepted bids 15:50 -10 16:00

5 Inputting new records -17:00 T+1 day

(new records) 8:30-15:00

6 Payment T+1 day

(issuance) 8:30-15:00

T+2 day

(issuance) 8:30-15:00

(3) Liquidity Enhancement Auction

Order Administrative work details On and after May 1, 2018 Comparison with

the past (minutes)

Before May 1, 2018

Implementation day Implementation time Implementation day Implementation time

1 Offer

T day

(auction, new

records)

10:30 -

T day

(auction)

10:30

2 Bidding deadline 11:50 -10 12:00

3 Announcement of auction

12:35 -10 12:45

4 Notification of accepted bids 14:30 -120 16:30

5 Inputting new records -17:00 T+1 day

(new records) 8:30-15:00

6 Payment T+1 day (issuance)

8:30-15:00 T+2 day

(issuance) 8:30-15:00

-3-

(4) T-Bill

Order Administrative work details On and after May 1, 2018 Comparison with

the past (minutes)

Before May 1, 2018

Implementation day Implementation time Implementation day Implementation time

1 Offer

T day

(auction, new

records)

10:20 -

T day

(auction)

10:20

2 Bidding deadline 11:30 - 11:30

3 Announcement of auction

12:30 -5 12:35

4 Notification of accepted bids 15:00 -60 16:00

5 Inputting new records -17:00 T+1 day

(new records) 8:30-15:00

6 Payment T+1 day

(issuance) 8:30-15:00

T+2 day

(issuance) 8:30-15:00

* If issuance day is not T+1 day (e.g. Hypothetical Example 3):

“Order 5: Inputting new records”

Implementation day: one business day before issuance date / Implementation time: -17:00

“Order 6: Payment”

Implementation day: issuance date / Implementation time: 8:30-15:00

(5) Buy-back Program - Settlement date: T+1 day - Auction timetable: no change If you have any question, feel free to ask us: JGB-IR@mof.go.jp Useful links on the shortening of JGB settlement cycle:

MOF “JGB Newsletter November 2017, Q&A: T+1 JGB settlement cycle”

https://www.mof.go.jp/english/jgbs/publication/newsletter/jgb2017_11e.pdf

MOF “Debt Management Report 2017, Column 5 Progress in Shortening of Settlement Cycles”

https://www.mof.go.jp/english/jgbs/publication/debt_management_report/2017/index.html

BOJ “Market Operations following the Shortening of JGB Settlement Cycle to T+1”

http://www.boj.or.jp/en/announcements/release_2018/rel180404a.pdf

JSDA “Points to Note for Post-Trade Processing (Settlement Matching) of JGB Transactions”

http://market.jsda.or.jp/shiraberu/saiken/content/Points_to_Note_for_Post-Trade_Processing(Settlement_Matching).pdf

-4-

1. Wage growth continues: “Shunto” In Japan, there are annual wage negotiations known as “Shunto” (the “Spring Offensive”) that

take place in spring. Following this year’s Shunto, the average monthly wage will increase by 2.54% in large enterprises (Keidanren survey) and by 2.10% in all enterprises (Rengo survey). The paces of growth have accelerated from those of the previous year in both surveys.

2. The number of foreign tourists to Japan is increasing The Japanese government has taken measures to increase the number of foreign tourists to

Japan and tourism development is one of the growth strategies under the Abenomics Policy. As shown in the left-hand side below, according to the Japan National Tourism Organization,

the number of foreign visitors to Japan in fiscal year 2017 rose 19.9 percent from the previous year to 29.8 million. The right-hand side shows the item “Travel” in Balance of Payments Statistics, which is the

difference between the amounts paid by travelers to Japan and Japanese travelers abroad. In the latest data released on April 9, 2018, the item achieved a surplus of 178.3 billion yen in February 2018, supported by the increase of foreign tourists to Japan.

MONTHLY TOPIC

(Source) Japan National Tourism Organization

-5-

“Travel” in Balance of Payments

(Source) Ministry of Finance

The number of foreign visitors to Japan

Change in average wages related to Shunto (Keidanren survey) (Large enterprises listed on the 1st section of Tokyo Stock Exchange)

Source: Japanese Trade Union Confederation (JTUC-RENGO)

Note1: All the figures are calculated based on “the number of union members weighted average growth”.

Note2: The figure of 2018 is cited from the extra survey as of April 19 while the others are cited

from the result of final survey.

Change in average wages related to Shunto (RENGO survey) (All enterprises including SMEs)

1.83%

2.28%

2.52%

2.27%2.34%

2.54%

1.0%

1.5%

2.0%

2.5%

3.0%

2013 2014 2015 2016 2017 2018

(YoY)

Source: Japan Business Federation (Keidanren)

Note1: The figure of 2018 is cited from the first survey as of April 25 while the others are cited from the

result of final survey.

1.71%

2.07%2.20%

2.00% 1.98%2.10%

1.0%

1.5%

2.0%

2.5%

3.0%

2013 2014 2015 2016 2017 2018

(YoY)

At the end of March 2018, Mr. Tsuji, Director of the Debt Management Policy Division, Financial Bureau, made a presentation in Kyoto, the old capital of Japan, to participants from foreign central banks and various financial institutions. The title of the presentation was “Japan’s Economy and Public Debt Management” which covered a broad range of topics. Firstly, he explained the recent development of the Japanese economy and the fiscal policy, including the progress of Abenomics. After that, he explained the current debt management policy and the FY2018 JGB issuance plan, emphasizing the importance of JGB issuance from the viewpoint of mid- and long-term market demand. Finally, he described the medium- and long-term view of the Japanese economy and the future of debt management policy, along with the long term trend of the economy and demographics. In the Q&A session, there were many important questions and that made the presentation much more valuable. We hope that all of the participants fully enjoyed the

presentation and the fully bloomed cherry blosssoms (sakura) in Kyoto.

-6-

IR OFFICE

If you have any questions regarding the contents of this newsletter, please do not hesitate to contact us at: JGB-IR@mof.go.jp

Auction Results

（Bonds）

Auction Date Type of Security Issue Number Maturity Date Nominal

Coupon

Amounts of Competitive

Bids (billion yen)

Amounts of Bids

Accepted (billion yen)

Yield at the Lowest

Accepted Price

Yield at the Average

Price

Amounts of Non-Competitive Bids Tendered

/Accepted (billion yen)

Amounts of Bids Accepted at the

Non-price- competitive Auction Ⅰ (billion yen)

Amounts of Bids Accepted at the

Non-price- competitive Auction Ⅱ (billion yen)

2/1/2018 10-year 349 12/20/2027 0.1% 8,818.8 1,923.7 0.090% 0.088% 0.386 374.8 157.4 2/6/2018 10-year Inflation-Indexed Bonds 22 3/10/2027 0.1% 1,352.7 400.0 ▲0.464% - - - 40.8 2/8/2018 30-year 57 12/20/2047 0.8% 2,763.1 646.7 0.822% 0.820% - 152.1 113.1 2/14/2018 5-year 134 12/20/2022 0.1% 8,398.8 1,797.7 ▲0.093% ▲0.093% - 401.3 281.8 2/22/2018 20-year 163 12/20/2037 0.6% 3,595.4 809.0 0.563% 0.561% - 189.8 147.1 2/27/2018 2-year 386 3/15/2020 0.1% 10,387.0 1,779.5 ▲0.159% ▲0.160% - 419.8 187.4 3/1/2018 10-year 350 3/20/2028 0.1% 8,430.3 1,859.5 0.062% 0.061% 0.465 438.9 340.1 3/6/2018 30-year 58 3/20/2048 0.8% 2,740.8 647.1 0.753% 0.750% - 152.1 88.1 3/13/2018 5-year 135 3/20/2023 0.1% 7,469.5 1,786.3 ▲0.106% ▲0.108% - 413.0 - 3/15/2018 20-year 164 3/20/2038 0.5% 3,597.3 804.9 0.544% 0.543% - 194.1 127.7 3/27/2018 40-year 10 3/20/2057 0.9% 1,593.5 499.5 0.885% - - - 66.6 3/29/2018 2-year 387 4/15/2020 0.1% 7,919.8 1,704.5 ▲0.137% ▲0.138% - 395.4 - 4/3/2018 10-year 350 3/20/2028 0.1% 7,445.8 1,789.7 0.033% 0.032% 1.286 408.2 328.4 4/12/2018 30-year 58 3/20/2048 0.8% 2,451.0 565.1 0.716% 0.714% - 133.7 103.7 4/17/2018 5-year 135 3/20/2023 0.1% 7,144.8 1,623.9 ▲0.118% ▲0.120% - 375.4 - 4/19/2018 20-year 164 3/20/2038 0.5% 2,972.2 804.4 0.505% 0.500% - 194.7 - 4/24/2018 2-year 388 5/15/2020 0.1% 9,349.0 1,733.3 ▲0.134% ▲0.134% - 366.5 199.2

Auction Results

（Treasury Discount Bills）

Auction Date Type of Security Issue Number Maturity Date

Amounts of Competitive Bids

(billion yen)

Amounts of Bids Accepted

(billion yen)

Yield at the Lowest

Accepted Price

Yield at the Average

Price

Amounts of Bids Accepted at the

Non-price- competitive Auction Ⅰ (billion yen)

2/1/2018 3-month 736 5/7/2018 15,839.90 3,577.95 ▲0.1503% ▲0.1595% 842.00 2/7/2018 6-month 737 8/10/2018 9,728.50 1,888.76 ▲0.1454% ▲0.1495% 411.20 2/8/2018 3-month 738 5/14/2018 15,970.80 3,629.04 ▲0.1479% ▲0.1524% 790.90 2/15/2018 3-month 739 5/21/2018 19,493.30 3,603.72 ▲0.1563% ▲0.1607% 836.20 2/16/2018 1-year 740 2/20/2019 10,826.40 1,867.18 ▲0.1607% ▲0.1627% 432.80 2/22/2018 3-month 741 5/28/2018 17,187.30 3,538.87 ▲0.1764% ▲0.1880% 821.10 3/1/2018 3-month 742 6/4/2018 15,045.16 3,578.08 ▲0.1944% ▲0.2112% 841.90 3/7/2018 6-month 743 9/10/2018 9,656.10 1,884.38 ▲0.1543% ▲0.1623% 415.60 3/8/2018 3-month 744 6/11/2018 13,994.70 3,563.06 ▲0.1824% ▲0.1976% 826.90 3/15/2018 3-month 745 6/18/2018 15,809.76 3,535.38 ▲0.1423% ▲0.1539% 834.60 3/16/2018 1-year 746 3/20/2019 10,318.40 1,885.16 ▲0.1408% ▲0.1427% 414.80 3/22/2018 3-month 747 6/25/2018 15,692.90 3,519.17 ▲0.1503% ▲0.1587% 830.80 4/3/2018 3-month 748 7/2/2018 17,689.80 3,545.54 ▲0.1326% ▲0.1393% 804.40 4/5/2018 3-month 749 7/9/2018 20,192.30 3,545.14 ▲0.1303% ▲0.1355% 834.80 4/6/2018 6-month 750 10/10/2018 13,304.10 1,868.80 ▲0.1534% ▲0.1594% 431.20 4/12/2018 3-month 751 7/17/2018 18,885.40 3,545.27 ▲0.1625% ▲0.1685% 834.70 4/18/2018 1-year 752 4/22/2019 11,598.50 1,700.10 ▲0.1757% ▲0.1796% 399.90 4/19/2018 3-month 753 7/23/2018 16,287.90 3,576.56 ▲0.1744% ▲0.1804% 843.40 4/26/2018 3-month 754 7/30/2018 15,381.10 3,575.27 ▲0.1358% ▲0.1556% 804.70

Auction Calendar for May. 2018 – Jul. 2018 Auction Date Issue Auction Date Issue Auction Date Issue Auction Date Issue

5/2(Wed) T-Bills (3-month) 5/25(Fri) T-Bills (3-month) 6/21(Thu) 5-year 7/18(Wed) Liquidity Enhancement Auction (remaining maturities of 5-15.5 years)

5/2(Wed) Liquidity Enhancement Auction (remaining maturities of 1-5 years) 5/29(Tue) 40-year 6/22(Fri) T-Bills (3-month) 7/19(Thu) T-Bills (1-year)

5/8(Tue) 10-year 5/31(Thu) 2-year 6/26(Tue) 20-year 7/20(Fri) T-Bills (3-month)

5/9(Wed) T-Bills (6-month) 6/1(Fri) T-Bills (3-month) 6/28(Thu) 2-year 7/20(Fri) Liquidity Enhancement Auction (remaining maturities of 1-5 years)

5/10(Thu) 10-year Inflation-Indexed Bonds 6/5(Tue) 10-year 6/29(Fri) T-Bills (3-month) 7/24(Tue) 40-year

5/11(Fri) T-Bills (3-month) 6/7(Thu) T-Bills (6-month) 7/3(Tue) 10-year 7/26(Thu) 2-year 5/15(Tue) 30-year 6/7(Thu) Liquidity Enhancement Auction

(remaining maturities of 15.5-39 years) 7/5(Thu) 30-year 7/27(Fri) T-Bills (3-month)

5/17(Thu) T-Bills (1-year) 6/8(Fri) T-Bills (3-month) 7/6(Fri) T-Bills (3-month)

5/17(Thu) 5-year 6/12(Tue) Liquidity Enhancement Auction (remaining maturities of 5-15.5 years) 7/9(Mon) T-Bills (6-month)

5/18(Fri) T-Bills (3-month) 6/14(Thu) T-Bills (3-month) 7/10(Tue) 5-year 5/22(Tue) 20-year 6/19(Tue) T-Bills (1-year) 7/12(Thu) 20-year 5/24(Thu) Liquidity Enhancement Auction

(remaining maturities of 5-15.5 years) 6/19(Tue) 30-year 7/13(Fri) T-Bills (3-month)

Top 10 PDs by Total Purchase in Auctions (Calculated by Duration) (Oct. 2017 ～ Mar. 2018) 1 Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. 6 Merrill Lynch Japan Securities Co., Ltd. 2 Nomura Securities Co., Ltd. 7 SMBC Nikko Securities Inc. 3 Daiwa Securities Co. Ltd. 8 Deutsche Securities lnc. 4 Mizuho Securities Co., Ltd. 9 Goldman Sachs Japan Co., Ltd. 5 BNP Paribas Securities (Japan) Limited 10 Morgan Stanley MUFG Securities Co., Ltd.

JGB PRIMARY MARKET

Note.1: The above calendar may be changed or added in light of changes in circumstances. In such cases, it will be announced in advance. Note.2: Each issue amount will be announced about one week prior to each auction date.

(Until 27 April 2018)

(Until 27 April 2018)

-7-

Results of Liquidity Enhancement Auctions

Auction Date Amounts of Competitive

Bids (billion yen)

Amounts of Bids

Accepted (billion yen)

Average Accepted Spread

Highest Accepted Spread

Issues Re-opened

2/16/2018 1,114.8 398.2 ▲0.007% ▲0.006% 20-year(149, 150, 152, 154, 155, 156) 30-year(13, 21, 30, 31, 32, 33, 34, 36, 40, 46, 47, 51, 52) 40-year(5, 7, 8, 9)

2/20/2018 2,087.4 548.9 ▲0.008% 0.001% 10-year(329, 334, 347, 348) 20-year(67, 69, 70, 71, 72, 73, 74, 77, 81, 83, 84, 94, 109, 123, 124, 125, 132, 133, 136, 137) 30-year(4)

3/8/2018 1,472.8 300.0 ▲0.033% ▲0.023% 5-year(124, 125, 126, 131) 10-year(311) 20-year(43)

3/20/2018 1,948.9 549.4 ▲0.002% 0.001% 10-year(328, 329, 330, 331, 338) 20-year(61, 66, 73, 81, 86, 122, 130) 30-year(2, 3, 10)

4/5/2018 1,242.2 499.5 0.002% 0.008% 20-year(150) 30-year(22, 26, 27, 28, 29, 32, 33, 34, 35, 36, 40, 41, 42, 45, 46, 47, 48, 49, 50, 51, 52, 54, 56, 57) 40-year(1, 2, 4, 5, 6)

4/10/2018 2,336.6 598.2 ▲0.002% 0.000% 10-year(329, 330, 332, 334, 340, 341, 346, 348) 20-year(63, 75, 76, 77, 84, 85, 92, 93, 94, 97, 113, 120, 125, 126, 134, 143, 144, 146)

Target Zones of Liquidity Enhancement Auctions for the First Quarter of FY 2018

10-year Inflation-Indexed

Auction Date Amounts of

Competitive Bids (billion yen)

Amounts of Bids Accepted

(billion yen)

Average Accepted

Spread (yen)

Highest Accepted

Spread (yen) Issue Numbers

10/20/2017 90.2 20.0 ▲0.182 ▲0.09 18, 19, 20, 22 12/11/2017 102.5 20.0 ▲0.004 0.05 18, 19, 20, 21, 22 2/13/2018 115.4 20.0 ▲0.211 ▲0.17 17, 20, 21, 22 4/11/2018 111.6 20.1 ▲0.082 ▲0.06 TBA

LIQUIDITY ENHANCEMENT AUCTIONS AND JGB BUY-BACK

①Remaining maturity : approx.1‐～5‐year

③Remaining maturity : approx.15.5‐～39‐year

Note1： JN shows 2‐year JGBs. JS shows 5‐year JGBs. JL shows 20‐year JGBs. JX shows 30‐year JGBs. JU shows 40‐year JGBs. Outstanding amount is as of the end of March 2018. Note2： All issues in the graph above will be eligible afterward.

Buy-back Results

(Until 27 April 2018)

(Until 27 April 2018)

②Remaining maturity : approx.5‐～15.5‐year

-8-

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,0005,5006,0006,5007,000

JN37

6

JN37

7

JS11

8

JS11

9

301

302

JN37

8

JN37

9

JN38

0

JS12

0

JS12

1

303

304

JL43

JN38

1

JN38

2

JN38

3

JS12

2

305

JN38

4

JN38

5

JN38

6

JS12

3

306

307

JL44

JL45

JS12

4

308

309

JL46

JS12

5

310

311

JL47

JS12

6

312

JL48

JS12

7

313

314

JL49

JL50

JS12

8

315

316

JL51

JS12

9

317

318

JL52

JS13

0

319

320

JL53

JL54

JS13

1

321

322

JL55

JS13

2

323

324

JL56

JL57

JS13

3

325

JL58

JS13

4

326

327

JL59

JL60 328

JL61

Amount issued by Liquidity Enhancement Auction Outstanding amount in the market (excluding amount issued by Liquidity Enhancement Auction)

1 2 5

(Remaining maturities)

（billion yen)

0500

1,0001,5002,0002,5003,0003,5004,000

JL14

7

JX13

JL14

8

JX14

JL14

9

JX15

JL15

0

JX16

JL15

1

JX17

JL15

2

JX18

JL15

3

JX19

JL15

4

JX20

JL15

5

JX21

JL15

6

JX22

JL15

7

JX23

JL15

8

JX24

JL15

9

JX25

JL16

0

JX26

JL16

1

JL16

2

JX27

JL16

3

JX28

JX29

JX30

JX31

JX32

JX33

JX34

JX35

JX36

JX37

JX38

JX39

JX40

JX41

JX42

JX43

JX44

JX45

JX46

JX47

JX48

JX49

JX50

JX51

JX52

JX53

JX54

JX55

JX56

JX57 JU1

JU2

JU3

JU4

JU5

JU6

JU7

JU8

JU9

JU10

Amount issued by Liquidity Enhancement Auction Outstanding amount in the market (excluding amount issued by Liquidity Enhancement Auction)（billion yen)

(Remaining maturities)15.5 20 39

0500

1,0001,5002,0002,5003,0003,5004,0004,5005,000

329

JL62

JL63 33

033

1JL

64 332

JL65

JL66 33

3JL

67JL

68JL

69 334

JL70

JL71 33

5JL

72 336

337

JL73

JL74 33

8JL

75JL

76JL

77 339

JL78

JL79

JL80 34

0JL

81JL

82 341

JL83

JL84 34

2JL

85JL

86JL

87 343

JL88

JL89 34

4JL

90JL

91 345

JL92 34

6JL

93JL

94 347

JL95

JL96 34

8JL

97JL

98 349

JL99

JL10

0JL

101

JL10

2JL

103

JL10

4JL

105

JL10

6JL

107

JL10

8JL

109

JL11

0JL

111

JL11

2JL

113

JX1

JL11

4JL

115

JX2

JL11

6JL

117

JX3

JL11

8JL

119

JL12

0JL

121

JL12

2JX

4JL

123

JL12

4JL

125

JL12

6JL

127

JX5

JL12

8JL

129

JL13

0JL

131

JX6

JL13

2JL

133

JL13

4JL

135

JL13

6JX

7JL

137

JL13

8JL

139

JL14

0JX

8JL

141

JL14

2JX

9JL

143

JL14

4JX

10JL

145

JX11

JL14

6JX

12

Amount issued by Liquidity Enhancement Auction Outstanding amount in the market (excluding amount issued by Liquidity Enhancement Auction)

5 10 15.5

(Remaining maturities)

（billion yen)

Note: BEI (Japan: 10 year) is calculated based on the compound interest rate of the new Inflation-Indexed Bonds and the 10-Year Bonds

Source: Japan: Calculation by the Ministry of Finance based on the information on interest rates offered by NIKKEI QUICK. U.S.A., U.K.: Bloomberg.

JGB SECONDARY MARKET JGB Yield Curves

Source: Japan Bond Trading Co.,Ltd.

Yields of JGB

Long - Term Interest Rates （10Yr） Source: Bloomberg

Source: Bloomberg

-9-

Yield and Volatility (10Yr)

Break-Even Inflation Rates

Source: Bloomberg, Calculation by the Ministry of Finance

(Until 30 March 2018)

(Until 30 March 2018)

(Until 30 March 2018)

(Until 30 March 2018)

-1%

0%

1%

2%

3%

4%

5%

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

BEI (Japan : 10 year)

BEI (U.S.A. : 10 year)

BEI (U.K. : 10 year)

-0.1%

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

Call Rate (Uncollateralized Overnight)

TIBOR 3-months (Euro-Yen)

Basic Loan Rate

Short-Term Interest Rates

Source: Bank of Japan, Japanese Bankers Association

JGB Over-the-Counter Trading Volume (TOKYO)

Trading Volume of 10-Year JGB Futures

Repurchase Transactions

-10-

Source: Japan Securities Dealers Association

Source: Tokyo Stock Exchange (until Mar.2014), Osaka Exchange (from Apr. 2014)

Source: Japan Securities Dealers Association

(trillion yen)

(trillion yen)

(trillion yen)

(Until 30 March 2018)

0

20

40

60

80

100

120

140

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

160

180

200

0

10

20

30

40

50

Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18

190200210220230240250260

Super long-term

Long-term

Medium-term

T-bills

-9.0

-7.0

-5.0

-3.0

-1.0

1.0

3.0

5.0

7.0

JanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJan

City Banks

Net Purchase

Net Sale

2013 2014 2015 2016 2017 2018

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

Jan Apr Jul OctJan Apr Jul OctJan Apr Jul OctJan Apr Jul OctJan Apr Jul OctJan

Regional banks

Net Purchase

Net Sale

2013 2014 2015 2016 2017 2018

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

JanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJan

Life and non-life insurance companies

Net Purchase

Net Sale

2013 2014 2015 2016 2017 2018

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

JanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJanApr Jul OctJan

Foreigners

Net Purchase

Net Sale

2013 2014 2015 2016 2017 2018

(unit: trillion yen)(unit: trillion yen)

(unit: trillion yen) (unit: trillion yen)

-11-

Trends in Bank Assets by Types

INVESTOR TRENDS AND JGB OUTSTANDING Trends in JGBs Transactions (by investor type)

BOJ Trends

Regional Banks City Banks

Source: Bank of Japan

(trillion yen) (trillion yen)

Loans

Cash and Deposits

Government Bonds

Municipal Bonds

Corporate Bonds

Equities

Foreign Securities

Source: Bank of Japan

Source: Japan Securities Dealers Association

-12-

JGBs Holdings by Foreign Investors

Banks(Banking Accounts) Life Insurance Companies

Transactions of Domestic Securities by Non-Residents

Note: “JGB” includes T-Bills. Source: Bank of Japan

Source: Ministry of Finance Source: Japan Securities Dealers Association

Outstanding of Repurchase Agreements (by Investor types)

Transactions of Foreign Securities by Residents (by Investor types)

Source: Ministry of Finance

Foreign Investors Presence

Note.1: Quarterly basis. Note.2: “JGB” includes T-Bills. The figures of ②excludes dealers’ transactions. Source: Bank of Japan, Japan Securities Dealers Association, Tokyo Stock Exchange,

Osaka Exchange

(trillion yen)

(trillion yen)

(trillion yen)

Source: Ministry of Finance

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

850

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016

18.6% 17.0% 17.8% 18.3% 18.2% 17.9% 17.3% 16.4% 15.1% 14.3%

11.5% 11.4%13.0% 12.5% 11.9% 12.4% 12.0% 11.1% 10.6% 10.5%

8.2% 8.9%8.5%

7.9% 8.6% 8.1% 7.8% 7.8% 7.9% 7.7%9.0% 9.2%

8.4%9.0% 8.6% 8.1% 8.1% 8.2% 7.8% 8.2%

8.6% 8.4%

8.8%8.4% 7.8%

7.8% 7.8% 7.4% 7.8% 6.8%

4.6% 5.3%

5.2%4.7%

4.9%4.4% 4.2% 5.0% 4.2% 4.4%

5.6% 5.6%

4.9%5.2% 4.6%

4.5%5.0% 4.3% 4.4% 4.8%

6.0% 5.5%

5.5%4.8%

4.8%5.3%

4.5% 4.5% 5.0% 4.8%

5.9% 6.2%

5.2%5.1%

5.6%4.7%

4.8% 5.2% 4.9% 5.1%

5.5% 5.0%

4.7%5.2%

4.4%4.3%

4.6% 4.2% 4.5% 4.1%

14.5% 14.8%

14.4%

14.4%14.9%

15.6%16.5%

17.7%18.4% 19.2%

2.0% 2.7%

3.6%

4.6%

5.8%

6.7%

7.5%8.3%

9.4%10.1% 20 yrs-

10-20 yrs

9-10 yrs

8-9 yrs

7-8 yrs

6-7 yrs

5-6 yrs

4-5 yrs

3-4 yrs

2-3 yrs

1-2 yrs

-1 yr

（trillion yen）

（at the end of FY）

541.5 545.9

594.0

636.3669.9

705.0

743.9

774.1805.4

*years to maturity

Average

YTM* 6Y1M 6Y3M 6Y5M 6Y8M 7Y0M 7Y3M 7Y7M 8Y0M 8Y5M 8Y7M

Average YTM*

(excluding saving

bonds)6Y1M 6Y4M 6Y6M 6Y10M 7Y1M 7Y5M 7Y8M 8Y0M 8Y5M 8Y8M

830.6

General Government

(ex Public Pensions)

3.4

0.3%

Fiscal Loan

Fund

0.0

0.0%

BOJ

449.4

41.1%

Banks,etc.

211.1

19.3%

Life and Non-life

Insurance,etc.

205.6

18.8%

Public

Pensions

45.9

4.2%

Pension

Funds

30.1

2.8%

Foreigners

122.5

11.2%

Households

12.4

1.1%

Others

12.0

1.1%

General Government

(ex Public Pensions)

3.4

0.3%

Fiscal Loan

Fund

0.0

0.0%

BOJ

427.2

43.2%

Banks,etc.

193.9

19.6%

Life and Non-life

Insurance,etc.

203.5

20.6%

Public

Pensions

45.9

4.6%

Pension

Funds

30.1

3.0% Foreigners

59.8

6.1%

Households

12.4

1.3%

Others

12.0

1.2%

JGB and T-Bill Holders

Breakdown by JGB and T-Bill Holders (The end of Dec. 2017 QE)

Source: Bank of Japan “Flow of Funds Accounts (Preliminary Figures)” Note1: “JGB” includes “FILP Bonds.” Note2: “Banks, etc.” includes “Japan Post Bank”, “Securities investment trust” and “Securities companies.” Note3: “Life and Non-life insurance, etc.” includes “Japan Post Insurance.”

(trillion yen)

Breakdown of Outstanding Amount of General Bonds by Remaining Years to Maturity

T-Bill Holders

Total 104.2 trillion yen

JGB Holders

Total 988.2 trillion yen

Total 1,092.4 trillion yen

-13-

General Government

(ex Public Pensions)

0.0

0.0% Fiscal Loan

Fund

0.0

0.0%BOJ

22.2

21.3%

Banks,etc.

17.2

16.5%

Life and Non-life

Insurance,etc.

2.1

2.1%

Public

Pensions

0.0

0.0%

Pension

Funds

0.0

0.0%

Foreigners

62.7

60.1%

Households

0.0

0.0%

Others

0.0

0.0%

Types The amount of redemption at maturity Scheduled redemption date

15-Year Floating-Rate Bonds 601.8 May 20

2-Year Bonds 2,304.0 May 15

Treasury Bill 2,000.0 May 21

Total 4,905.8

Source: Ministry of Finance

Time-to-Maturity Structure of Outstanding JGB（Dec. 2017）

General Bonds Issuance Amount and Outstanding

Note 1: Issuance Amount: revenue basis, FY2007-2016: Actual, FY2017: Supplementary budget, FY2018: Initial budget Note 2: Outstanding: nominal basis, FY2007-2016: Actual, FY2017: Supplementary budget, FY2018: Initial budget Source: Ministry of Finance

Market-held Balance of the Inflation-Indexed Bonds (as of the end of March, 2018)

(trillion yen)

Scheduled redemption of JGB at maturity in May, 2018

Note.1: The figures are based on the outstanding JGBs at the end of March, 2018. Note.2: The figures are the scheduled redemption at maturity and may be different from the actual redemption due to Buy-back of JGBs. Note.3: The figures do not include "JGB for Retail Investors". Note.4: If the redemption date coincides with bank holiday, the payment of redemption is carried out on the following business day. Note.5: Figures may not sum up to total because of rounding.

(billion yen)

-14-

Source: Ministry of Finance, Bank of Japan

31.97

108.35

83.27

69.27

60.61

52.55

42.0039.48

42.32 40.11

27.35

12.1914.35 16.19

15.76

18.56 18.1019.89

19.17 18.0011.43

4.75 5.32 6.41 6.96 6.24 8.19 9.46 10.83 9.23 6.341.31 1.33 1.93 1.87 1.96 2.07 2.27 2.39 1.56

0102030405060708090

100110120130

17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56

(trillion yen）

(FY)

Treasury Bills2-yr bondsJGBs for retail investors (3-yr-Fixed-rate)JGBs for retail investors (5-yr-Fixed-rate)5-yr bondsInflation-Indexed bondsJGBs for retail investors (Floating-rate)10-yr bonds15-yr-floating-rate bonds20-yr bonds30-yr bonds40-yr bonds

Average remaining years to maturity： 8 years and 9 months

541.5 545.9594.0

636.3669.9

705.0743.9 774.1

805.4 830.6863.9 882.8

124.6 127.1 142.4 143.1

163.1 163.3 153.6 158.0 150.5

148.3 144.1 137.9

100

200

300

400

500

600

700

800

900

0

30

60

90

120

150

180

07 08 09 10 11 12 13 14 15 16 17 18

Outstanding (right-hand scale) Issuance Amount (left-hand scale)

0100200300400500600700800900

1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,0002,1002,200

16 17 18 19 20 21 22

(billion yen)

(issue number)

Outstanding amount(excl. BOJ holding)BOJ holding

Old type(without

floor)

Market BOJ TotalOld 252 182 435New 6,599 1,347 7,947

4.7

-2.5-1.5

0.8

4.73.7

3.2

-0.2

3.6

-6.8

-0.1

2.6

5.5

0.2 0.4

-1.1

2.71.3

0.9 1.11.9

2.42.4

1.6

-12.0

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ Ⅰ Ⅱ Ⅲ Ⅳ

2012 2013 2014 2015 2016 2017

(％)

Private Demand Public Demand

Foreign Demand Real GDP

Annualized rate of Change from the previous quarter (Seasonally adjusted)

(CY)

2.3

3.2

4.3 3.8

5.4

4.4

5.5

4.1

4.3

1.8

3.3

0.9

2.1

1.1 1.6

-0.0

1.6 2.1

1.7

-1.0 -0.5

0.9

2.0 1.6

4.3

3.9

4.9

3.1

5.9

4.6

5.8

4.1

6.0

4.6

7.0

4.3

-8

-6

-4

-2

0

2

4

6

8

2009

Q120

09Q2

2009

Q320

09Q4

2010

Q120

10Q2

2010

Q320

10Q4

2011

Q120

11Q2

2011

Q320

11Q4

2012

Q120

12Q2

2012

Q320

12Q4

2013

Q120

13Q2

2013

Q320

13Q4

2014

Q120

14Q2

2014

Q320

14Q4

2015

Q120

15Q2

2015

Q320

15Q4

2016

Q120

16Q2

2016

Q320

16Q4

2017

Q120

17Q2

2017

Q320

17Q4

Primary Income Trade BalanceServices Secondary IncomeCurrent Account

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Jan-

09

May

-09

Sep-

09

Jan-

10

May

-10

Sep-

10

Jan-

11

May

-11

Sep-

11

Jan-

12

May

-12

Sep-

12

Jan-

13

May

-13

Sep-

13

Jan-

14

May

-14

Sep-

14

Jan-

15

May

-15

Sep-

15

Jan-

16

May

-16

Sep-

16

Jan-

17

May

-17

Sep-

17

(Diffusion index)

Large enterprises/Manufacturing

Large enterprises/Non-Manufacturing

Small enterprises/Manufacturing

Small enterprises/Non-Manufacturing

Real GDP Growth Rate

Employment Conditions

Prices

Changes in Current Account

Monetary Base Indices of Industrial Production

Total Value of Machinery Orders (Private Sector exc. Volatile orders)

TANKAN (Business Conditions)

Source: Cabinet Office "Quarterly Estimates of GDP"

Source: Ministry of Internal Affairs and Communications “CPI”

Source: Ministry of Health, Labour and Welfare “Employment Referrals for General Workers “, Ministry of Internal Affairs and Communications “Labour Force Survey”

Source: Ministry of Finance “Balance of Payments"

Source: Ministry of Economy, Trade and Industry "Indices of Industrial Production”

Source: Cabinet Office, Government of Japan "Orders Received for Machinery"

(trillion yen)

ECONOMIC AND FINANCIAL TRENDS

Source: Bank of Japan "Monetary Base"

Source: Bank of Japan "Tankan"

-15-

English Publications on JGBs Frequency URL Debt Management

Message from the Financial Bureau As needed https://www.mof.go.jp/english/jgbs/debt_management/message.htm

About JGBs As needed https://www.mof.go.jp/english/jgbs/debt_management/guide.htm

About the Debt Management Policy As needed https://www.mof.go.jp/english/jgbs/debt_management/about.htm

JGB Issuance Plan As needed https://www.mof.go.jp/english/jgbs/debt_management/plan/index.htm

Auction Calendar

Auction Calendar Monthly https://www.mof.go.jp/english/jgbs/auction/calendar/index.htm

Historical Data of Auction Results Each Auction https://www.mof.go.jp/english/jgbs/auction/past_auction_results/index.html

Topics

Product Characteristics of the JGB As needed https://www.mof.go.jp/english/jgbs/topics/bond/index.html

Treasury Discount Bills (T-Bills) Annual https://www.mof.go.jp/english/jgbs/topics/t_bill/index.htm

Japanese Government Guaranteed Bonds Annual https://www.mof.go.jp/english/jgbs/topics/gov_guaranteed_bonds/index.htm

Interest Rate Swap Semiannual https://www.mof.go.jp/english/jgbs/topics/swap/index.htm

Taxation of Government Bonds As needed https://www.mof.go.jp/english/jgbs/topics/taxation2016/index.html

For Individual Investors As needed https://www.mof.go.jp/english/jgbs/topics/individual/index.htm

Data

Central Government Debt Quarterly https://www.mof.go.jp/english/jgbs/reference/gbb/index.htm

Interest Rate Daily https://www.mof.go.jp/english/jgbs/reference/interest_rate/index.htm

STRIPS Monthly https://www.mof.go.jp/english/jgbs/reference/jgbstat/index.htm

Dialogue with the market

Advisory Councils on Government Debt Management Each Meeting https://www.mof.go.jp/english/about_mof/councils/gov_debt_management/index.html

Meeting of JGB Market Special Participants Each Meeting https://www.mof.go.jp/english/about_mof/councils/jgbsp/index.html

Meeting of JGB Investors Each Meeting https://www.mof.go.jp/english/about_mof/councils/jgb_investor/index.html

Publications

Debt Management Report Annual https://www.mof.go.jp/english/jgbs/publication/debt_management_report/index.htm

JGB Newsletter Monthly https://www.mof.go.jp/english/jgbs/publication/newsletter/index.htm

Debt Management Policy Division, Financial Bureau, Ministry of Finance 3-1-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8940 Japan

Phone: 81-3-3581-4111 Web: www.mof.go.jp

To subscribe to our Newsletter mailing list, please email: JGB-IR@mof.go.jp

-16-

INFORMATION