The Ministry of Finance has announced that it will raise the ``covenant interest rate'', which indicates interest, to 0.5%, more than double the current rate, for 10-year government bonds to be issued this month.
This is the first level in eight years and one month, taking into account that market yields have risen due to the revision of the Bank of Japan's monetary easing measures.
According to the announcement, the "coupon interest rate" of the 10-year government bond to be issued this month will be 0.5%.
The "covenant interest rate" has been 0.2% since April last year, more than doubled.
The Bank of Japan revised its monetary easing policy last month, raising the cap on long-term interest rate fluctuations to around 0.5%, boosting yields on market-traded government bonds.
It is the first time in eight years and one month since December 2014 that the "coupon interest rate" of 10-year government bonds has exceeded 0.5%.
In the initial budget for this fiscal year, the Ministry of Finance assumes that the interest rate for interest payments on government bonds will be 1.1%, and this increase is not expected to have an immediate impact on national projects.
However, a rise in the "covenant interest rate" will lead to an increase in interest payments, so even in the initial budget proposal for the new fiscal year, more than 30% of the revenue will continue to depend on government bonds, and in the future, the yield will rise further. It is also expected to have a certain impact on finances.