TOKYO (AFX) - Commercial banks, insurers and other financial institutions, including the Bank of Japan, are holding more than 500 trln yen in Japanese government bonds, a record, the Nihon Keizai Shimbun reported on Saturday.
Their aggregate JGB holdings came to 503 trln yen as of September 30, up 6.1 pct from a year earlier, according to the central bank. They held nearly all JGBs outstanding, whose balance stood at 587 trln yen.
Domestic banks held 77 trln yen in JGBs, up 20.7 pct. Big banks aggressively purchased the bonds when the market plunged in the summer, said Susumu Kato, chief bond strategist at Lehman Brothers Japan Inc.
The BoJ has been actively conducting outright purchases of long-term JGBs since March 2001, when it introduced the quantitative easing policy, and now buys 14.4 trln yen in JGBs a year.
Such massive purchases have drastically increased the BoJ's asset holdings, which rose to a record 149.7 trln yen as of December 10 -- up 50 pct in four years. Long- and short-term JGBs accounted for two-thirds of this amount.
Such high levels of JGB holdings will also mean growing risks for financial institutions should bond prices drop. A 1 percentage point rise in the yield on 10-year JGBs will generate an estimated 1.4 trln yen in paper losses for the central bank alone.
mas
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Their aggregate JGB holdings came to 503 trln yen as of September 30, up 6.1 pct from a year earlier, according to the central bank. They held nearly all JGBs outstanding, whose balance stood at 587 trln yen.
Domestic banks held 77 trln yen in JGBs, up 20.7 pct. Big banks aggressively purchased the bonds when the market plunged in the summer, said Susumu Kato, chief bond strategist at Lehman Brothers Japan Inc.
The BoJ has been actively conducting outright purchases of long-term JGBs since March 2001, when it introduced the quantitative easing policy, and now buys 14.4 trln yen in JGBs a year.
Such massive purchases have drastically increased the BoJ's asset holdings, which rose to a record 149.7 trln yen as of December 10 -- up 50 pct in four years. Long- and short-term JGBs accounted for two-thirds of this amount.
Such high levels of JGB holdings will also mean growing risks for financial institutions should bond prices drop. A 1 percentage point rise in the yield on 10-year JGBs will generate an estimated 1.4 trln yen in paper losses for the central bank alone.
mas
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
© 2005 AFX News
