Preparing for an end to deflation
Japan’s Ministry of Finance issued its first inflation-linked bonds this year. While the market has lacked liquidity, growing expectations for an end to deflation in Japan means more investors are getting involved. Nick Sawyer reports
It is very much early days for Japan’s inflation-linked bond market. The first auction of inflation-indexed Japanese government bonds (JGBi) took place in March, with ¥100 billion ($899 million) up for grabs – a drop in the ocean compared with the ¥540 trillion in government bonds outstanding as of December last year. The second auction took place in early June, this time with ¥300 billion of paper offered to bidders.
However, the JGBi market has got off to a slow start, with the bonds suffering
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