What’s New: Meetings of JGB Market Special Participants and JGB Investors p. 2-4 The 75th Meeting of JGB Market Special Participants and the 74th Meeting of JGB

Investors were held on March 22 and March 23, 2018 respectively.

Auction schedules on April-June 2018 of JGBi and Liquidity Enhancement Auction were announced. The amount of issuance of JGBi and the allocation of issuance amount for each zone of Liquidity Enhancement Auction on April-June 2018 are consistent with FY2018 issuance plan.

Reopening schedule of 10-40-year Bonds was also announced.

Monthly Topic: GDP Oct.-Dec. 2017 (2nd Preliminary) and JGB holders p. 5 The real GDP growth rate Oct.-Dec. 2017 was revised up from 0.1% to 0.4%, reflecting

the upward revision of Private Non-Residential Investment, etc.

Breakdown by JGBs (including T-Bills) Holders as of the end of December 2017 was released.

IR Office: To the Middle East p. 6 Our IR activities in March: We visited the Middle East.

(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.

April 2018

-1-

The Meetings of JGB Market Special Participants and JGB Investors The 75th Meeting of JGB Market Special Participants and the 74th Meeting of JGB Investors

were held on March 22 and March 23, 2018, respectively. Considering the opinions in the meetings, the MOF decided on the “Issuance of the Inflation-Indexed Bonds on April-June 2018”, “Issuance Amounts for Liquidity Enhancement Auctions on April-June 2018” and “Issuance and Reopening Schedule of 10-year, 20-year, 30-year and 40-year Bonds (FY2018)” as explained in the meetings. In addition, the participants discussed the latest JGB market situation and the future outlook.

<Issuance of the Inflation-Indexed Bonds on April-June 2018> Issuance Amount on May 2018 will be about 400 billion yen. Reopening method: 1 issue in FY2018

May, August, November 2018 and February 2019 issues will be the issue No. 23. (Maturity：March 10, 2028, Reference CPI：December 2017)

Auction method is Dutch-style-price-competitive (single price) auction (0.05 yen bidding scale).

Auction schedule of issuance and Buy-back Program of Inflation-Indexed Bonds on April-June 2018.

Auction Month Auction amount

April 2018 Buy-back: Approximately 20 billion yen

May 2018 Issuance: Approximately 400 billion yen

June 2018 Buy-back: Approximately 20 billion yen (Note1) Issues eligible for the buy-backs will be those from issue number 17 to 22 for April auction and 17 to 23 for June auction. (Note2) The plan could be changed owing to market conditions and others. (Source) MOF https://www.mof.go.jp/english/jgbs/topics/press_release/20180326-02e.htm

<Issuance Amounts for Liquidity Enhancement Auctions on April-June 2018> The issuance amount at each auction is increased from the previous quarter because the

amount for Liquidity Enhancement Auctions is planned to increase to 12.6 trillion yen in FY2018 (FY2017: 10.8 trillion yen).

April 2018 May 2018 June 2018

(1) Issues with remaining maturities of 1-5 years Not be implemented

Approximately 400 billion yen

Not be implemented

(2) Issues with remaining maturities of 5-15.5 years Approximately 600 billion yen

Approximately 600 billion yen

Approximately 600 billion yen

(3) Issues with remaining maturities of 15.5-39 years Approximately 500 billion yen

Not be implemented

Approximately 500 billion yen

(Note1) Remaining maturities are calculated starting from the first day of each quarter (i.e., April 1). (Note2) Eligible issues for 2-year JGBs in (1)zone will be those with remaining maturities of more than one year as May 1st 2018 for May auction. (Note3) The plan could be changed owing to market conditions and others. * It is supposed that the shortening of the JGB settlement cycle will start from May 1, 2018. (Source) MOF https://www.mof.go.jp/english/jgbs/topics/press_release/20180326-01e.htm

What’s new

-2-

<Issuance and Reopening Schedule of 10-year, 20-year, 30-year and 40-year Bonds (FY2018)> [Issuance and reopening schedule]

(Note1) It is supposed that the shortening of the JGB settlement cycle will start from May 1, 2018. (Note2) The plan could be changed owing to market conditions and others. (Note3) For 10-year Bonds, it will be issued as a new issue in case the gap between the market interest rate on the auction day and

the coupon rate of the issue with the same maturity is more than 0.30%. (Note4) For 40-year Bonds, auction method is Dutch-style-yield-competitive (single yield) auction (0.5 bp bidding scale). (Note5) The month of maturity of 5-30-year Bonds issued in June 2018 will be March (instead of June as in FY2017) because of the introduction

of the T+1 JGB settlement cycle. Note that the month of maturity of Bonds issued in the four months, March, April, May and June in 2018, will be March. After July 2018, the month of maturity of Bonds issued in three months (e.g., July, August and September in 2018) will be the same (e.g., June) under the reopening rule.

(Source) MOF https://www.mof.go.jp/english/jgbs/topics/press_release/20180326-03e.htm (Reference) Q&A: T+1 JGB settlement cycle https://www.mof.go.jp/english/jgbs/publication/newsletter/jgb2017_11e.pdf

Maturity Issue Date Mar-2018 Apr-2018 May-2018 Jun-2018 Jul-2018 Aug-2018 Sep-2018

Issue No.

Maturity Date

Issue No.

Maturity Date

Issue No.

Maturity Date

Issue No. No.10 - No.11 - No.11 - No.11Maturity Date Mar-2057 - Mar-2058 - Mar-2058 - Mar-2058

Maturity Issue Date Oct-2018 Nov-2018 Dec-2018 Jan-2019 Feb-2019 Mar-2019

Issue No.

Maturity Date

Issue No.

Maturity Date

Issue No.

Maturity Date

Issue No. - No.11 - No.11 - No.11Maturity Date - Mar-2058 - Mar-2058 - Mar-2058

No.352

Dec-2048No.61

Dec-2038No.167

Dec-2028No.353

Sep-2048No.60

Sep-2038No.166

Sep-2028

Mar-2038No.164

Mar-2028No.350

Jun-2048No.59

Jun-2038No.165

Jun-2028No.351

Mar-2048No.58

10

20

30

40

10

20

30

40

-3-

<Discussion about auction method> There were various opinions on auction method for 40-year Bonds, which would be a Dutch-style-yield-competitive (single yield) auction in FY2018 instead of a conventional-style-price-competitive (multiple price) auction which is applied to the other maturities. The MOF summarized the opinions in the meetings as follows: Some participants prefer the Dutch-style-yield-competitive (single yield) auction and

others prefer the transition to the conventional-style-price-competitive (multiple price) auction.

The Dutch-style-yield-competitive (single yield) auction is preferred because the investors of 40-year Bonds are limited compared to those for 20-year and 30-year Bonds and, thus, the supply demand balance for 40-year Bonds tends to be biased due to the seasonality and the liquidity is relatively low. In addition, the Dutch-style- yield-competitive (single yield) auction could support smooth issuance because 40-year is at the end of the yield curve.

Transition to the conventional-style-price-competitive (multiple price) auction is preferred because the depth of the secondary market has been improving since the start of the issuance ten years ago. In addition, auction participants are cautious about purchasing 40-year Bonds at a higher price in a Dutch-style-yield-competitive (single yield) auction because the Dutch-style-yield-competitive (single yield) auction often results in higher prices than the market price.

The MOF thinks that the depth of the 40-year Bonds market is emerging now, ten years after the start of the issuance. However, the investor base of 40-year Bonds is still limited compared to that of the other maturities and the price movement tends to become unidirectional. Considering these situations, the MOF suggests that it is better to keep the Dutch-style-yield-competitive (single yield) auction in FY2018 to implement smooth issuance of 40-year Bonds.

-4-

(％)2016 201710～12 1～3 4～6 7～9 10～12

0.3 0.5 0.6 0.6 0.4 *** 1.6-0.1 0.4 0.9 0.1 0.4 *** 1.8

(-0.1) (0.4) (0.9) (0.1) *** (0.4) ***0.1 0.5 0.8 0.2 0.6 (0.4) 2.40.0 0.3 0.9 -0.6 0.5 (0.3) 2.10.0 0.3 0.9 -0.7 0.5 (0.3) 2.1

Excluding Imputed Rent -0.0 0.3 1.1 -0.9 0.6 (0.3) 2.30.8 1.2 0.9 -1.7 -2.6 (-0.1) -10.11.5 0.2 1.2 1.0 1.0 (0.2) 4.2

(-0.2) (0.1) (-0.1) (0.4) *** (0.1) ***-0.6 0.1 1.2 -0.5 -0.0 (-0.0) -0.2-0.2 0.1 0.2 0.1 -0.0 (-0.0) -0.0-1.9 -0.2 4.8 -2.6 -0.2 (-0.0) -0.8

(-0.0) (0.0) (0.0) (-0.0) *** (-0.0) ***(0.4) (0.1) (-0.3) (0.5) *** (-0.0) ***Net Exports of Goods & Services

201710～12

Gross Domestic Product

Domestic Demand

Private DemandPrivate Consumption

Consumption of Households

Change in Private InventoriesPublic Demand

Private Residential InvestmentPrivate Non-Resi. Investment

Government ConsumptionPublic InvestmentChange in Public Inventories

1. Quarterly Estimates of GDP Oct.–Dec. 2017 (Second Preliminary Estimates) The second preliminary GDP estimate (Oct. – Dec. 2017) was released on March 8. Real GDP

expanded by 0.4% (annual rate 1.6%) from the previous quarter which was revised up from the first preliminary GDP estimate, 0.1% (annual rate 0.5%). Real GDP has grown for 8 consecutive quarters. Reflecting the results of the Financial Statements Statistics of Corporations by Industry released on

March 1, etc., Private Non-Residential Investment and Change in Private Inventories were revised up, which contributed 0.2% points and 0.1% points respectively.

2. Breakdown by JGBs (including T-Bills) Holders (end of December 2017) On March 19, the Bank of Japan (BOJ) released the Flow of Funds Accounts of the 4th Quarter 2017.

The shares of JGBs (including T-Bills, hereinafter referred to as “JGBs”) holders were updated as follows:

Development of Real GDP (Quarterly, seasonally adjusted series)

MONTHLY TOPIC

Note1: Change from the previous quarter (seasonally adjusted) Note2: Annual rate Note3: The Figures in () indicate contributions to Changes in GDP. Source: Cabinet Office, Government of Japan

Source: Cabinet Office, Government of Japan

Note1

Note2

The total amount of JGBs and T-Bills outstanding increased by 5.2 trillion yen to 1,092.4 trillion yen. BOJ increased its holdings of JGBs by 4.3 trillion yen to 449.4 trillion yen. The amount of JGBs held by domestic banks in Q4 fell by 2.5 trillion yen to 211.1 trillion yen. Foreigners increased their holdings of JGBs to 122.5 trillion yen (T-Bills: 62.7 trillion yen, 60.1% of the

total amount of T-Bills). [p. 13]

Total ¥1,087.1 trillion Total ¥1,092.4 trillion Source: Bank of Japan “Flow of Funds Account (Preliminary Figures)”

The end of Sep. 2017 The end of Dec. 2017

(Unit: trillion yen)

(Unit: trillion yen)

-5-

General Government

(ex Public Pensions)3.4

0.3%Fiscal Loan Fund

0.0 0.0%

BOJ449.4 41.1%

Banks,etc.211.1 19.3%

Life and Non-life Insurance,etc.

205.6 18.8%

Public Pensions45.9 4.2%

Pension Funds30.1 2.8%

Foreigners122.5 11.2%

Households12.4 1.1%

Others12.0 1.1%

General Government

(ex Public Pensions)3.5

0.3% Fiscal Loan Fund0.0

0.0%

BOJ445.1 40.9%

Banks,etc.213.6 19.6%

Life and Non-life Insurance,etc.

204.7 18.8%

Public Pensions46.4 4.3%

Pension Funds30.3 2.8%

Foreigners119.7 11.0%

Households12.2 1.1%

Others11.7 1.1%

In March 2018, Ms. Kimata, Director for Debt Management and JGB Investor Relations, and Mr. Oshima, Researcher, took a business trip to the Middle East, Qatar, Kuwait and UAE, to provide timely and precise information on JGBs and the Japanese economy, etc. The IR tour to the region was the first time since 2016.

We visited 15 investors in the three countries and explained the Japanese economy and the JGB market, including the FY2018 issuance plan. Despite the geographical distance between the region and Japan, they were as knowledgeble as other regions and the meetings were very fruitful. Because they were very interested in Japanese demographics, the declining birthrate and aging population and the related government policy, we reacknowledged the importance of continuing provision of information on this issue.

Although one flight was delayed and I had to change my cloth in 8 minutes in time for a meeting, we could visit all investors in our plan. The team appreciates the exciting discussions, warm welcome, Arabic coffee and herbal tea.

-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)

1/10/2018 10-year 349 12/20/2027 0.1% 6,925.3 1,850.7 0.079% 0.078% 0.386 448.1 167.5 1/12/2018 40-year 10 3/20/2057 0.9% 1,835.4 499.6 0.985% - - - 72.5 1/16/2018 5-year 134 12/20/2022 0.1% 9,354.6 1,786.7 ▲0.082% ▲0.084% - 412.2 210.8 1/18/2018 30-year 57 12/20/2047 0.8% 2,475.0 657.0 0.837% 0.832% - 142.1 - 1/25/2018 20-year 163 12/20/2037 0.6% 3,350.6 804.3 0.594% 0.592% - 194.4 70.2 1/30/2018 2-year 385 2/15/2020 0.1% 8,890.7 1,770.3 ▲0.129% ▲0.130% - 428.8 192.6 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 -

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)

1/5/2018 3-month 730 4/9/2018 15,999.70 3,532.48 ▲0.1373% ▲0.1484% 817.50 1/10/2018 6-month 731 7/10/2018 10,307.90 1,908.84 ▲0.1243% ▲0.1324% 391.10 1/11/2018 3-month 732 4/16/2018 14,983.90 3,583.16 ▲0.1162% ▲0.1251% 776.80 1/17/2018 1-year 733 1/21/2019 9,750.90 1,879.47 ▲0.1371% ▲0.1401% 420.50 1/18/2018 3-month 734 4/23/2018 16,649.70 3,588.86 ▲0.1443% ▲0.1559% 831.10 1/25/2018 3-month 735 5/1/2018 15,216.90 3,566.55 ▲0.1487% ▲0.1554% 823.40 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

Auction Calendar for Apr. 2018 – Jun. 2018 Auction Date Issue Auction Date Issue Auction Date Issue Auction Date Issue

4/3(Tue) T-Bills (3-month) 4/24(Tue) 2-year 5/22(Tue) 20-year 6/14(Thu) T-Bills (3-month)

4/3(Tue) 10-year 4/26(Thu) T-Bills (3-month) 5/24(Thu) Liquidity Enhancement Auction (remaining maturities of 5-15.5 years) 6/19(Tue) T-Bills (1-year)

4/5(Thu) T-Bills (3-month) 5/2(Wed) T-Bills (3-month) 5/25(Fri) T-Bills (3-month) 6/19(Tue) 30-year

4/5(Thu) Liquidity Enhancement Auction (remaining maturities of 15.5-39 years) 5/2(Wed) Liquidity Enhancement Auction

(remaining maturities of 1-5 years) 5/29(Tue) 40-year 6/21(Thu) 5-year

4/6(Fri) T-Bills (6-month) 5/8(Tue) 10-year 5/31(Thu) 2-year 6/22(Fri) T-Bills (3-month)

4/10(Tue) Liquidity Enhancement Auction (remaining maturities of 5-15.5 years) 5/9(Wed) T-Bills (6-month) 6/1(Fri) T-Bills (3-month) 6/26(Tue) 20-year

4/12(Thu) T-Bills (3-month) 5/10(Thu) 10-year Inflation-Indexed Bonds 6/5(Tue) 10-year 6/28(Thu) 2-year 4/12(Thu) 30-year 5/11(Fri) T-Bills (3-month) 6/7(Thu) T-Bills (6-month) 6/29(Fri) T-Bills (3-month)

4/17(Tue) 5-year 5/15(Tue) 30-year 6/7(Thu) Liquidity Enhancement Auction (remaining maturities of 15.5-39 years)

4/18(Wed) T-Bills (1-year) 5/17(Thu) T-Bills (1-year) 6/8(Fri) T-Bills (3-month) 4/19(Thu) T-Bills (3-month) 5/17(Thu) 5-year 6/12(Tue) Liquidity Enhancement Auction

(remaining maturities of 5-15.5 years) 4/19(Thu) 20-year 5/18(Fri) T-Bills (3-month) 6/13(Wed) T-Bills (Approx.2-month)

Top 10 PDs by Total Purchase in Auctions (Calculated by Duration) (Jul. 2017 ～ Dec. 2017) 1 Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. 6 BNP Paribas Securities (Japan) Limited 2 Nomura Securities Co., Ltd. 7 Deutsche Securities lnc. 3 Daiwa Securities Co. Ltd. 8 SMBC Nikko Securities Inc. 4 Mizuho Securities Co., Ltd. 9 Goldman Sachs Japan Co., Ltd. 5 Merrill Lynch Japan Securities Co., Ltd. 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. Note.3: The issue date of Treasury Discount Bills auctioned on June 13, 2018 is June 15, 2018, and the maturity date is August 2, 2018.

(Until 30 March 2018)

(Until 30 March 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

1/5/2018 1,350.5 299.8 ▲0.033% ▲0.031% 5-year(125) 10-year(310) 20-year(44, 54)

1/22/2018 1,830.4 548.7 ▲0.008% ▲0.005% 10-year(329, 330, 331, 332, 348) 20-year(97, 100, 144, 145) 30-year(4, 6, 9, 11)

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)

Target Zones of Liquidity Enhancement Auctions for the Fourth Quarter of FY 2017

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

8/18/2017 126.7 20.0 ▲0.111 ▲0.08 22 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

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 November 2017. Note2： All issues in the graph above will be eligible afterward.

Buy-back Results

(Until 30 March 2018)

(Until 30 March 2018)

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

0500

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

JN37

2

JN37

3

JN37

4

JS11

7

299

300

JL41

JL42

JN37

5

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

JS12

2

305

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 326

327

JL59

JL60

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

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

328

JL61 32

9JL

62JL

63 330

331

JL64 33

2JL

65JL

66 333

JL67

JL68

JL69 33

4JL

70JL

71 335

JL72 33

633

7JL

73JL

74 338

JL75

JL76

JL77 33

9JL

78JL

79JL

80 340

JL81

JL82 34

1JL

83JL

84 342

JL85

JL86

JL87 34

3JL

88JL

89 344

JL90

JL91 34

5JL

92 346

JL93

JL94 34

7JL

95JL

96 348

JL97

JL98

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

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

5 1015.5

(Remaining maturities)

（billion yen)

0500

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

JL14

6

JX12

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

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 JU1

JU2

JU3

JU4

JU5

JU6

JU7

JU8

JU9

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

-8-

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

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

2-year bond 5-year bond 10-year bond

20-year bond 30-year bond 40-year bond

-1%

0%

1%

2%

3%

4%

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

Japan United States

United Kingdom Germany

-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)

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 28 February 2018)

(Until 28 February 2018)

(Until 28 February 2018)

(Until 28 February 2018)

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

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

Treasury Discount BillsMedium Term BondsLong Term Bonds

0

20

40

60

80

100

120

140

160

180

200

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

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 28 February 2018)

-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

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

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

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

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

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

-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

2-Year Bonds 2,415.0 April 15

Treasury Bill 2,000.0 April 20

Total 4,415.0

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 February, 2018)

(trillion yen)

Scheduled redemption of JGB at maturity in April, 2018

Note.1: The figures are based on the outstanding JGBs at the end of February, 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

15 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 334 236 570New 6,650 1,297 7,947

1.5%

0.3%

-1

0

1

2

3

4

Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18

(%)

CPI

CPI excluding food (excludingalcohilic beverages) and energy

Change from the previous year

Apr.4, 2013BOJ released QQE

70

80

90

100

110

120

130

140

150

160

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

Jan-

18

(2010 average=100・Seasonally Adjusted Index)

Production Shipments

Inventory Inventory Ratio

0.4

0.6

0.8

1

1.2

1.4

1.6

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

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

（ratio）

Feb, 20181.58 times

Feb, 20182.5％

Aug, 20090.42times

Jul, 20095.5％

Job opening-to-application ratio(right scale)

Unemployment rate(left scale)

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