TOKYO: Japan's Ministry of Finance plans to sell a record 149.7 trillion yen ($1.93 trillion) of bonds through regular auctions in the fiscal year from April, sources with knowledge of the planning told Reuters.
The ministry is considering raising the monthly issue of 20-year bonds by 100 billion yen, and also either the five-year bonds or 10-year bonds by that amount, the sources said.
The total sales of 149.7 trillion yen would be 4.8 trillion yen larger than this year's initial plan.
The size of the increase is mostly in line with market expectations and the market is likely to take the new plan in its stride, with many Japanese investors content with holding a large amount of Japanese government bonds.
Yet the sovereign debt crisis in Europe is making many investors nervous as Japan's public debt, already by far the biggest relative to economic size among the industrialised countries, keeps ballooning.
A failed German bond auction last month set JGB market players on edge, pushing up the 10-year JGB yield to a four-month high of 1.090 percent, though the yield has fallen back below 1.0 percent since then.
Japan's total debt issuance in 2012/13, which includes sales of retail JGBs, rollover by the Bank of Japan and others on top of sales through auctions, could reach around 175 trillion yen, a finance ministry official said this week.
Japan's debt sales to the market have also doubled in just over 10 years, from 67.9 trillion yen in 1999/2000, due to a combination of stimulus spending, a slump in tax revenues amid a weak economy and rising social welfare costs.
The jump in Japan's debt burden has led to numerous predictions of a looming fiscal crisis, although those forecasts have so far proven misplaced as domestic investors, backed by roughly $15 trillion in household savings, have been happy to gobble up government debt as the economy stagnates.
At the moment, more than 90 percent of Japanese government debt is held by domestic investors, who want fixed income products in yen.
Foreign investors' holdings, however, had risen to 8.2 percent, the second-highest level on record, as of the end of September as they put money in Japanese bonds to escape Europe.
Many analysts expect foreign holdings to increase in the long run as domestic investors' capacity to absorb bonds looks set to decline due to the aging and shrinking population, making JGBs more vulnerable to an exodus of foreign capital that has been seen in some European countries this year.
The official figures will be announced after the cabinet seals that year's budget, likely on December 24.
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