▲ Exterior of the Japanese Ministry of Finance
Japan's Ministry of Finance raised the coupon rate for 10-year government bonds issued this month from 2.7% per annum to 3.1% on October 6.
This marks the highest level for the rate since August 1996, when it stood at 3.1%.
This adjustment is seen as a response to the continuous rise in government bond yields traded in the market, prompting an increase in the coupon rate to match.
The coupon rate refers to the annual interest rate paid by the government to investors who purchase government bonds.
If a government bond's coupon rate is lower than the market rate, its appeal as a financial product diminishes, leading to a decrease in demand among buyers.
In response, the Ministry of Finance reviews and adjusts the coupon rates of newly issued government bonds every three months, taking market interest rate levels into account.
In Japan's bond market, interest rates have risen due to expectations of a rate hike by the Bank of Japan and inflation concerns stemming from the situation in the Middle East.
Last month, the yield on 10-year government bonds, which serves as the benchmark for long-term interest rates, rose into the 3% range, marking its highest level since 1996.
(Photo: Homepage capture, Yonhap News)
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