Japan will sell record amount of extra bonds to combat coronavirus crisis

Publisher: The Insight Partners

Japan will sell a record amount of extra bonds this fiscal year, worth more than $165 billion, straining the industrial world’s heaviest debt burden, as Tokyo compiles a record stimulus to combat the coronavirus.

Prime Minister Shinzo Abe on Tuesday rolled out a package worth 108.2 trillion yen ($990 billion), or 20% the size of the economy, vowing to take “all steps” to combat deepening fallout from the virus pandemic.

“In a crisis like this, Japan has little choice but to embark on helicopter money like other major economies,” said Yasuhide Yajima, chief economist at NLI Research Institute.

Finance Minister Taro Aso told reporters that the government was placing higher priority on trying to revive the economy than restoring public finances.

The package included 20 trillion yen of stimulus steps already put in place last December, which helped inflate the headline figure. Actual fiscal spending came to 39.5 trillion yen, including 10 trillion yen from December’s stimulus.

The 18.2 trillion yen extra bond issuance in the new fiscal year from April beat the previous record of 16.9 trillion yen issued during the 2009 global financial crisis, bringing overall annual market issues to a five-year high of 147 trillion yen.

All the maturities, except for 40-year bonds, inflation-linked bonds and liquidity enhancement auctions, will increase.

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