2018
Debt Management Report
The Government Debt Management and the State of Public Debts
Preface
■ 1 About “Debt Management Report” ……………………………………………………… 2
■ 2 What is Debt Management Policy? ………………………………………………………3
(1)… Overview …………………………………………………………………………3
(2)… Framework of “Government Funding Activities” …………………………………4
(3)… Debts with Public Characteristics …………………………………………………5
JGB Yields …………………………………………………………………7
I FY2018 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 JGBs ……………………………………………15
(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 Diversification of JGB Investor Base ……………………………………………………24
(1) … JGB Holdings by Retail Investors …………………………………………………25
(2) … JGB Holdings by Foreign Investors ………………………………………………27
II Framework 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
Column7
Column8
ii
（4） Borrowings from the Private Sector …………………………………………… 100
（5） Borrowing through Public Auction on Private-sector Borrowings …………… 101
■ 3 Government-Guaranteed Debt ……………………………………………………… 102
（1） Legal Ground of Government Guarantee ……………………………………… 102
（2） Features of Government-Guaranteed Debt …………………………………… 102
（3） Treatment in the Budget and Examination Process …………………………… 102
■ 4 Subsidy Bonds ……………………………………………………………………… 105
（1） Subsidy Bonds (narrowly defined) ……………………………………………… 105
（2） Subscription/Contribution Bonds ……………………………………………… 105
（3） Others …………………………………………………………………………… 105
◆Chapter 3 Other Public Debt
■ 1 Local Government Bonds (LGBs) …………………………………………………… 107
（1） Basic Scheme of LGBs ………………………………………………………… 107
（2） LGB Program …………………………………………………………………… 109
■ 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
III Appendices
◆Chapter 1 Government Bonds (JGBs)
■ 1 Primary Market for Government Bonds …………………………………………… 114
（1） Issuance Amount of Government Bonds ……………………………………… 114
（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 Offered to the Market at Each Auction … 119
（5） Principal/Coupon Payment Corresponding to Days of Issuance in FY2018 …… 120
（6） Closing Bids Share for JGBs by Investor Type in FY2017 ……………………… 121
（7） Issuance of JGBs for Retail Investors …………………………………………… 122
（8） Issuance by the Bank of Japan Rollover ………………………………………… 123
（9） Front-Loading Issuance of Refunding Bonds …………………………………… 123
（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-Inflation (BEI) Rate ……………………………………………… 127
（7） Market Price of 15-Year Floating-rate Bonds …………………………………… 128
（8） JGB Share in Total Trading Volume of Yen Bonds …………………………… 128
（9） JGB Share in Total Issuance Amount of Yen Bonds …………………………… 129
（10） Portfolio Investment Assets in FY2017 ………………………………………… 130
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（11） Portfolio Investment Liabilities in FY2017 ……………………………………… 130
（12） Trends in JGB Transactions (by investor type) in FY2017 ……………………… 131
（13） Trading Volume of Yen Bonds ………………………………………………… 132
（14） Trading Volume of JGB Futures ………………………………………………… 132
（15） Trading Volume of Bond Gensaki ……………………………………………… 132
（16） Trading Volume of Bond-Lending ……………………………………………… 133
（17） Open Interest Amounts of Bond-Lending ……………………………………… 133
（18） Trading Volume of JGB Option by OTC ………………………………………… 133
（19） Trading Volume of JGB Futures Options ……………………………………… 134
（20） Outstanding Amount of STRIPS-Principal-Only Book-entry Transfer JGBs … 134
（21） Results of Outright Purchases of JGBs by the Bank of Japan in FY2017 ……… 135
（22） Results of Outright Purchases of T-Bills by the Bank of Japan in FY2017 ……… 140
（23） Japan's Sovereign Ratings by Major Credit Rating Agencies …………………… 141
（24） List of Sovereign Ratings by Major Credit Rating Agencies …………………… 141
■ 3 Debt Management Systems ………………………………………………………… 142
（1） Revenues and Expenditures for the Special Account for the GDCF
(FY2018 Initial Budget) ………………………………………………………… 142
（2） Payment status of debt redemption expenses and interest, discount expenses and
so on of the each account (FY2018 Initial Budget, FY2016 Settlement of Accounts) …143
（3） Transfer of Redemption Sources, Redemption Amount, Outstanding Amount
and Refunding Amount of the GDCF (FY2018 Initial Budget) ………………… 144
（4） GDCF Investment in JGBs ……………………………………………………… 144
（5） Budgetary Surplus of the Special Account of the GDCF ……………………… 145
（6） Results of Liquidity Enhancement Auctions Bid Achievements in FY2017 …… 145
（7） Buy-back Results in FY2017 …………………………………………………… 145
（8） Buy-back Results ……………………………………………………………… 145
（9） Various councils ………………………………………………………………… 146
（10） History of Postwar Debt Management Policy …………………………………… 150
（11） Government Bond-related Legal Systems ……………………………………… 152
◆ Chapter 2 Financing Bills, Borrowings and Government-Guaranteed Debt
■ 1 Financing Bills (FBs) ………………………………………………………………… 155
（1） Outstanding Amount of FBs-Breakdown by the Types (as of the end of FY2017) … 155
（2） Outstanding Amount of FBs …………………………………………………… 155
（3） Issuance Amount of FBs in FY2017-Breakdown by Funding Resources ……… 156
（4） Receipts and Payments on the National Treasury for FY2017 ………………… 156
■ 2 Borrowings …………………………………………………………………………… 157
（1） Outstanding Amount of Borrowings …………………………………………… 157
（2） Outstanding Amount of Borrowings -Breakdown by the Types of Account (as of the end of FY2017) …… 157
（3） Outstanding Amount of Borrowings of the Special Account for Local Allocation Tax … 158
（4） Amount of Borrowings of the Special Account for Local Allocation Tax Offered to the Market at Each Auction … 158
（5） Auction Results of the Borrowings of the Special Account for Local Allocation Tax in FY2017 … 159
（6） Auction Results of the Borrowings of the Special Account for the National Forest Debt Management in FY2017 … 160
（7） Auction Results of the Borrowings of the Special Account for Energy Policy in FY2017 · · · 160
■ 3 Government-Guaranteed Debt ………………………………………………………… 161
（1） Changes in the Outstanding Amount of Government-Guaranteed Debt ……… 161
（2） Changes in the Issuance Amount of Government-Guaranteed Domestic Bonds Offered to the Market … 161
（3） Breakdown of the Government-Guaranteed Debt by Agencies ………………… 162
（4） Issuance Calendar of Government-Guaranteed Domestic Bonds by Agencies in FY2017 … 163
（5） Outstanding Amount of Government-Guaranteed Foreign Bonds-Breakdown by
Denomination and by Agencies (as of the end of FY2017) ……………………… 165
（6） Yields of 10-Year Government-Guaranteed Bonds in FY2017 ………………… 165
◆Chapter 3 Other Public Debt
■ 1 Local Government Bonds (LGBs) …………………………………………………… 166
（1） Overview of LGB Program in FY2018 ………………………………………… 166
（2） LGB Program-Breakdown by Funding Resources ……………………………… 166
（3） Outstanding Amount of LGB Program-Breakdown by Funding Resources …… 167
（4） Issuance Conditions of Public Offering LGBs in FY2017 ……………………… 168
（5） Issuance Amount of Public Offering LGBs …………………………………… 168
■ 2 Debt of Incorporated Administrative Agencies, etc. ………………………………… 169
（1） FY2018 FILP Plan ……………………………………………………………… 169
（2） Planned and Actual Issuance Amount of FILP Agency Bonds ………………… 170
（3） Yields of 10-Year FILP Agency Bonds in FY2017 ……………………………… 171
◆【Supplement】 Fiscal Conditions and Debt Outstandings