Preparing for an end to deflation
Japan’s Ministry of Finance issued its first inflation-linked bonds in March, with more planned in June and December. But with Japan still struggling to overcome deflation and with concerns over liquidity, many investors have chosen to remain on the sidelines so far. Nick Sawyer reports
It’s 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 just ¥100 billion ($915 million) up for grabs – a drop in the ocean compared with the ¥540 trillion in government bonds outstanding as of December last year. The next auction is scheduled for early June, this time with ¥300 billion of paper set for issue.
Nonetheless, despite it being a very young market, something of a Catch 22 is
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