Japan is looking to the East Asian country’s USD 7 trillion household savings hoard to support bond demand with plans to launch new products and incentives, building on recent positive movements on the retail bond sales front, as the Sanae Takaichi government looks to fill a void left by diminished central bank buying.
Efforts to attract Japanese household savings are not new. In 2010, the East Asian country’s finance ministry created a mascot, Kokusai-sensei, or Professor JGB, to pitch the securities and later even offered gold coins to buyers of special reconstruction bonds. However, things have been different in 2025, as higher yields have succeeded in drawing in buyers this year. Retail Japanese government bond (JGB) sales jumped 30.5% in 2025 to 5.28 trillion yen (USD 33.55 billion), the highest since 2007.
Encouraged by the above-mentioned strong momentum, the finance ministry, at a meeting with more than a dozen institutional investors in November 2025, faced calls to step up efforts to attract retail buyers. Broadening the investor base for JGBs has become critical for market stability as Prime Minister Sanae Takaichi’s reflationary policies fuel concerns about the government’s plans to borrow and spend.
Japan’s 10-year government bond yield jumped past the 2% ceiling for the first time in 26 years on December 19 after the Bank of Japan (BOJ) raised interest rates to a three-decade high and signalled more policy tightening.
“Households are seen as a key source of new demand as the BOJ scales back its buying and commercial banks face limits to their bond-buying firepower from capital rules that curb interest rate risk. With retail JGBs yielding even less than the type sold to banks, the securities have historically been a tough sell. Domestic households own less than 2% of the 1.06 quadrillion yen in outstanding JGBs, and about half of Japan’s 2.20 quadrillion yen in household financial assets sit in cash or low-yield deposits,” reported Reuters.
“When it comes to finding new investors, we believe there is room for expansion among individuals,” said one participant of the finance ministry’s meeting, according to minutes that did not name the speakers.
“As overseas investors cannot be relied upon as stable holders, we should consider product designs that encourage ownership by individual investors, such as increasing offerings like investment trusts for 30-year bonds,” another said.
Daiwa Asset Management and Amova Asset Management recently launched investment trusts focused on 30-year JGBs, targeting domestic retail bond investors for the first time.
“Amova started thinking about crafting the trust when the 30-year JGB yield hit 3%,” said Takuya Kanazawa, a senior vice-president at the firm’s product development department, while interacting with Reuters. The yield exceeded 3% for the first time in May 2025 and climbed to a fresh record of 3.445% on December 22.
“The 3% yield is high enough to beat inflation. When retail investors think about investing in high-yield debt, they tend to be US or Australian bonds, but those always carry currency risks. With this fund, they can enjoy higher yields without such risks,” the official concluded.
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