Japan will sell about 800 billion yen ($10.4 billion) of additional government debt to the market this fiscal year to fund earthquake reconstruction and help companies cope with a strong yen, the Ministry of Finance said.
The total for investors such as banks and life insurers will be a record 145.7 trillion yen, compared with an initial plan for the year started April 1 of 144.9 trillion yen.
The amount announced today was below predictions from analysts at UBS AG, Mizuho Securities Co. and Nomura Securities Co. as the government seeks to control the biggest debt burden in the industrialized world. Policy makers aim to drive an economic recovery after three-consecutive quarters of contraction and the March 11 quake and tsunami that left more than 19,000 people dead or missing.
“The issuance plan gave a positive surprise to the bond market,” said Katsutoshi Inadome, a fixed-income strategist in Tokyo at Mitsubishi UFJ Morgan Stanley Securities Co., one of the 25 primary dealers obliged to bid at government debt sales. “Though the additional issuance is small, that doesn’t mean Japan’s overall financial burden is small, which is the bigger issue.”
Prime Minister Yoshihiko Noda approved today a 12.1 trillion yen third supplementary budget to fund rebuilding. The package will include 2 trillion yen to help companies deal with the yen’s appreciation. The government has already unveiled two packages totaling 6 trillion yen for quake relief.
