What Is a Japanese Government Bond?
There are many types of bonds in the Japanese bond market, which can be roughly divided into three categories: public bonds, corporate bonds and external debt, each of which includes many specific bonds.
Japanese bond market
Right!
- Chinese name
- Japanese bond market
- Foreign name
- Japanese Bond Market
- Types of
- Corporate bonds, public bonds
- Corporate bonds
- There are many types of bonds in the Japanese bond market, which can be roughly divided into three categories: public bonds, corporate bonds and external debt, each of which includes many specific bonds.
- Japanese Bond Market
- Corporate Bond
- Depending on the issuer, corporate bonds are divided into
- Public Bond
- Public bonds include Japanese government bonds,
- Bond issuance methods are divided into public offering and private offering.
Private placement in the Japanese bond market
- This refers to the issue of bonds by issuers through direct negotiations with specific investors. Part of local bonds and general business bonds use this method of issuance.
Public offering in the Japanese bond market
- Refers to the issuance of bonds to unspecified investors in the form of public offerings. But in Japan, many times, public offerings are not targeted at an unspecified number of investors. Public offerings can be divided into indirect public offerings, public bidding, fixed-rate public offerings, and sales.
- 1. Indirect public offering. Treasury bonds include long-term interest-bearing treasury bonds and medium-term discounted treasury bonds. The specific method is to form a government bond offtake group consisting of urban banks, long-term credit banks, local banks, trust banks, various vaults, insurance companies, and securities companies. The contract was sold by public tender. If there are unsold treasury bonds after the public bidding, the treasury bond offtake group will take over all of them.
- 2. Public bidding. This method is used for bonds such as medium-term interest-bearing government bonds and short-term government bonds (treasury bills). Public bidding can be divided into two types: competitive bidding and fixed bidding. Competitive bidding is divided into price bidding and revenue bidding, which is the same as auction issuance in the US government bond issuance. Fixed-rate bidding refers to the average price of the winning bids in competitive bidding as the bond's issuance rate. This is an issuance method adopted in 1982 to facilitate the subscription of small and medium-sized financial institutions.
- 3. Fixed-rate public offering is a unique method of issuing government short-term securities (financing bonds). Government short-term securities are issued in a discounted manner, but the discount rate is not determined by competition from bidders, but is predetermined and is lower than short-term financial market interest rates. There are also restrictions on the institutions that can participate in the fixed-rate public offering, which are mainly various financial institutions. Enterprises can only subscribe through securities companies. If the subscription amount is less than the predetermined issuance amount, the balance will be taken over by the Bank of Japan. In fact, because the discount rate is lower than the market rate, government short-term securities issued at a fixed rate are basically taken over by the Bank of Japan. Government guarantee bonds are also issued this way.
- 4. Sold. That is, the total amount to be issued is not determined in advance, and the issuer directly sells bonds to the general public within a certain period. The total amount of bonds sold during this period is the total amount issued. Since there is no such provision in commercial law, only financial bonds can be used.