Japan could channel so-called bridging bonds in supporting Prime Minister Sanae Takaichi's investment measures, Bloomberg News reported Thursday, citing Chief Cabinet Secretary Minoru Kihara.
The government will expand on past budget measures that relied on bridging bond issuances, such as those supporting corporate efforts in green technology adoption, the report cited Kihara as saying.
Issuers use bridging bonds to cover temporary funding needs, provided that future funding channels can be obtained, the report said.
The plan comes as investors express concerns about a rise in bond issuance amid the current administration's pro-spending fiscal stance, with the 10-year government bond yield briefly hitting a new peak since 1996 earlier in May, the report said.
While the bridging plan proposal looks to ease worries on large issuances of deficit financing bonds, repayment plan concerns could still put pressure on bonds, the report said.
Investors could consider such issuances that grow spending before obtaining steady funding sources as a negative mark against fiscal discipline, the report cited Keisuke Tsuruta, a senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities, as saying.
The government assured that it would further push for a controlled approach to fiscal policy by balancing fiscal sustainability through a lower debt-to-GDP ratio with market confidence, the report cited Kihara as saying.
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