‘Dear God’: Japan’s borrowing costs hit 30-year high

The yield that Japan pays for a 10-year loan reached 3% on Tuesday, its most expensive rate since September 1996. 

The government’s borrowing cost has increased 2,900% in less than five years.

Originating a loan of the same duration in early 2022 cost the sovereign just 0.1%.

Japanese government bonds (JGBs) set multi-decade records across their yield curve. The country is paying a 1.81% yield to borrow for two years, 2.26% for five years, 3.8% for 20 years, and 4.18% for 30 years.

Only 40-year JGBs are below a multi-decade record, albeit only slightly: 4.28%. That duration set its recent record at 4.4% in May.

As the government pays up to bond investors, otherwise hesitant buyers are happy to continue attending auctions. Tuesday’s 10-year JGB auction attracted more than three bids per bond, keeping the rate of bidding in-line with the annual average.

Highest cost for Japan to borrow money since the 1990s

Today’s milestone for several durations of JGBs is a multi-decade record but not technically an all-time high. For example, Japanese ministry archives show JGBs offering higher yields in the 1990s.

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