Reading the terms: a government-guaranteed bond is not a government bondA bond the state guarantees is not the same as the state's own debt
On November 6 the Ministry of Finance announced that a government guarantee would be attached to the 553rd Japan Expressway Holding and Debt Repayment Agency bond, issued as a social bond. The issuer is an incorporated administrative agency, not the state itself. Even among bonds the state is involved in, who issues them changes their nature. From the published terms we look at how to tell issuers apart, and why the coupon rate and the yield to subscribers match when the issue price is 100 yen.
Key points
- The issuer is the Japan Expressway Holding and Debt Repayment Agency, an incorporated administrative agency. That is a different issuer from a government bond, where the state itself is the borrower
- The announcement states that a government guarantee is to be attached. The terms are an issue amount of JPY 25 billion, a coupon rate of 2.987 percent, an issue price of 100.00 yen and a yield to subscribers of 2.987 percent
- The issue date is November 18, 2026 and the redemption date is November 28, 2036: terms that run about ten years
- When the issue price is 100.00 yen, the coupon rate and the yield to subscribers match. You pay 100 yen, receive 2.987 percent each year and are repaid 100 yen, so the share you receive stays at the coupon rate
- The same day also brought an announcement of a government guarantee for the 14th Japan Investment Corporation bond. Government-guaranteed bonds come from several issuers besides the state
What to do in practice
- Whenever you read about a bond, first check who issues it and who repays it: the state, an incorporated administrative agency, or a company
- Put the rate on your own borrowing of around ten years beside the coupon on a roughly ten-year government-guaranteed bond issued in the same period, to gauge the level of long-term rates
A bond is something like an IOU issued when money is borrowed. On November 6 the Ministry of Finance announced that it would attach a state guarantee to the 553rd bond issued by the Japan Expressway Holding and Debt Repayment Agency, an incorporated administrative agency. The borrower is not the state but that agency. The terms are JPY 25 billion, interest of 2.987 percent a year, and repayment on November 28, 2036. Unlike a government bond, the borrower is someone else.
- Price paid
- 100.00 yen
- Annual interest rate
- 2.987 percent
- Interest in one year per 100 yen
- 2.987 yen
Points
- The bond is issued not by the state but by an incorporated administrative agency, the Japan Expressway Holding and Debt Repayment Agency
- The state attaches a guarantee to that bond. This is what is called a government-guaranteed bond
- The terms are JPY 25 billion, interest of 2.987 percent a year, and repayment on November 28, 2036
What the words mean
- bond
- A certificate issued when money is borrowed, with the repayment date and interest fixed
- government guarantee
- The state attaching its guarantee to a bond issued by a body other than the state
- incorporated administrative agency
- A body set up to carry out part of the state's work. It is not the state itself
- Ministry of Finance (MOF): Ministry of Finance: Government guarantee granted to the 553rd Japan Expressway Holding and Debt Repayment Agency bond (social bond)
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This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.