TOKYO - Major Japanese investors saw room for additional government bond issuance of around 16.9 trillion yen ($157 billion) in fiscal year that began on April 1 in order to fund stimulus measures needed to soften the economic impact of the coronavirus pandemic, a finance ministry official said on Thursday.
The size of the increase in Japanese government bonds (JGBs) issuance would be similar to the extra amount issued to combat the financial crisis that followed the collapse of Lehman Brothers in 2008, the official told reporters.
"The investors have in mind 16.9 trillion yen as an amount the JGB market can absorb," said the official, speaking after a meeting with investors from 21 commercial banks and securities firms to discuss the prospect of additional JGB issuance.
Complaining about a lack of liquidity in the market, some investors called for the increase in JGB issuance to be spread over a wide range of maturities except for 40-year bonds, the official said.
The government currently plans to sell nearly 129 trillion yen of JGBs this fiscal year, and the extra issuance will strain what is already the industrial world's heaviest debt burden at more than twice the size of Japan's $5 trillion economy.
Prime Minister Shinzo Abe on Saturday unveiled a plan to roll out an "unprecedented" stimulus measures exceeding 57-trillion yen, including direct spending totalling 16.9 trillion yen.
The government is expected to compile an extra budget next week for the current fiscal year to help fund the package, which will involve additional bond issuance.
Reuters reported on Monday Japan would boost JGB issuance by 16 trillion yen from July to fund the stimulus package.
An acceleration in the spread coronavirus cases in Japan has fuelled speculation that Abe could declare a state of emergency. The pandemic has already dealt a heavy blow to the economy, and forced a postponement of the Tokyo Olympics until 2021.
($1 = 107.2700 yen)
(Reporting by Tetsushi Kajimoto;) ((tetsushi.kajimoto@thomsonreuters.com; +81-3-4563-2731;))
