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On October 15, Rakuten Securities began handling ultra-long-term government bonds with maturities of 20, 30, and 40 years. The coupon rate for the 30-year bond is 4.0%. For individual government bonds, the interest rates for all three types reached the 2% range in the October offering, and in August, the monthly issuance amount exceeded 1 trillion yen for the first time. This report confirms the differences between coupon rates and yields, the institutional differences between individual government bonds and interest-bearing government bonds, changes in issuance amounts and purchaser demographics, shifts in the composition of government bond holders including the Bank of Japan and life insurance companies, and the levels of domestic and international long-term interest rates. Furthermore, it explains the significance of households beginning to appear as buyers of government bonds from three perspectives: the market floor, policy authorities, and global capital flows.
Start of Ultra-Long-Term Government Bond Handling by Rakuten Securities
In an announcement released on October 6, Rakuten Securities stated that it would begin handling ultra-long-term government bonds starting October 15. The offerings are 20-year, 30-year, and 40-year interest-bearing government bonds, all of which are existing bonds traded in the market.
Ultra-Long-Term Government Bonds Handled by Rakuten Securities
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20-year No. 197, Coupon rate 3.7%
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30-year No. 91, Coupon rate 4.0%
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40-year No. 19, Coupon rate 3.8%
Redemption dates for each issue
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20-year No. 197: June 20, 2046
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30-year No. 91: June 20, 2056
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40-year No. 19: March 20, 2066
Among the three issues, the 30-year bond has the highest coupon rate, while the 40-year bond is lower than the 30-year bond. Since coupon rates are determined by market interest rates at the time of issuance, longer maturities do not necessarily mean higher rates. The 40-year No. 19 was issued earlier than the 30-year No. 91, and the interest rate level at that time is reflected.
Trading conditions
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Minimum purchase amount: 50,000 yen
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Purchase unit: 50,000 yen increments
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Fees: None separately (included in price)
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Mid-term redemption by the government: None
While it is stated that there are no separate fees, trading costs are included in the purchase price. The securities company’s trading costs are added to the purchase price, and a difference arises accordingly compared to the selling price. The only way to cash out before maturity is to sell in the market, and Rakuten Securities clearly states that there is a possibility that the principal may be lower depending on the price at the time of sale.
On October 7, Business Insider Japan covered the start of Rakuten Securities’ handling of these bonds in comparison to individual government bonds. The article also highlights the lack of a government buyback mechanism and the fact that prices fall when interest rates rise as key points to keep in mind.
The difference between the coupon rate of 4.0% and the actual yield
The 4.0% on 30-year bonds is the coupon rate. The coupon rate indicates the percentage of interest paid annually relative to the face value and does not match the yield at the time of purchase. Rakuten Securities also states that the actual yield varies depending on the price at the time of purchase and will be displayed separately on the purchase screen.
The price of existing bonds fluctuates daily in the market. When market interest rates rise, existing bonds with lower interest rates become relatively less attractive, and their prices fall. Conversely, when interest rates fall, prices rise.
The magnitude of this price fluctuation increases in proportion to the length of the remaining term. Even with the same 0.1% change in interest rates, a bond with 30 years remaining will have a much larger price swing compared to a bond with 5 years remaining. Rakuten Securities’ guidance also notes that the longer the term, the greater the price fluctuation due to interest rate changes.
If the purchase price is higher than the face value, the yield when held to maturity will be lower than the coupon rate. Conversely, if purchased at a price lower than the face value, the yield will be higher than the coupon rate. This is why buying a bond with a 4.0% coupon rate does not guarantee a 4.0% annual return.
Regarding the tax system, a tax rate of 20.315% is applied to interest and capital gains from interest-bearing government bonds. If held in a specific account, it is possible to offset gains and losses with listed stocks, etc. On the other hand, individual government bonds are not eligible for NISA.
Institutional differences between individual government bonds and interest-bearing government bonds
Even though they are both government bonds, individual government bonds and interest-bearing government bonds traded in the market have very different characteristics.
Main mechanisms of individual government bonds
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Purchasers: Limited to individuals
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Types: Floating 10-year, Fixed 5-year, Fixed 3-year
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Minimum purchase amount: 10,000 yen
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Mid-term redemption: Repurchased by the government after 1 year from issuance
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Minimum guaranteed interest rate: 0.05%
Individual government bonds are repurchased by the government at face value one year after issuance. When redeemed, an amount equivalent to the most recent two interest payments (the amount obtained by multiplying the pre-tax interest by 0.79685) is deducted, but the principal itself is designed to be protected. The fact that they are not subject to market price fluctuations is the biggest difference from interest-bearing government bonds.
Interest-bearing government bonds are no different from individual government bonds in that they are redeemed at face value if held until maturity. If sold before maturity, the market price is applied as is, and if interest rates have risen, a loss will occur. Since the purchase unit, redemption method, and presence or absence of price fluctuations are all different, they must be compared as separate products even if they share the name ‘government bond’.
Interest rates for the October offering of individual government bonds and the inversion of the fixed 5-year rate
On October 7, the Ministry of Finance announced the interest rates for individual government bonds for the October offering. This is the first time that the interest rates for all three types have reached the 2% range.
Interest rates for the October offering (before tax)
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Floating 10-year 2.05%
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Fixed 5-year 2.39%
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Fixed 3-year 2.07%
Interest rates for the October offering (after tax)
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Floating 10-year 1.6335%
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Fixed 5-year 1.9045%
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Fixed 3-year 1.6495%
According to Mynavi News, the increase from the previous month is 0.10 points for the floating 10-year, 0.15 points for the fixed 5-year, and 0.11 points for the fixed 3-year. The fixed 5-year had already reached the 2% range in the August offering, and with the October offering, the remaining two types have also joined the 2% range. The application period is from October 8 to October 30, and the issue date is November 16.
Interest rates for the May offering (before tax)
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Floating 10-year 1.67%
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Fixed 5-year 1.89%
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Fixed 3-year 1.57%
Over the five months since May, the floating 10-year has risen by 0.38 points, the fixed 5-year by 0.50 points, and the fixed 3-year by 0.50 points. The increase in the fixed types has exceeded that of the floating 10-year.
The situation where the interest rate of the fixed 5-year exceeds that of the floating 10-year stems from the system’s calculation formula. The interest rate for the floating 10-year is calculated by multiplying the yield of 10-year government bonds by 0.66. The fixed 5-year is determined by subtracting a certain margin from the market’s 5-year interest rate. In the floating 10-year method, which multiplies the 10-year rate by 0.66, the gap with market interest rates widens as interest rates rise, making it easier for the fixed 5-year, which is based on the 5-year interest rate, to exceed it.
At a study group on national debt management held by the Ministry of Finance on May 26, SBI Securities submitted materials. According to the materials, the interest rate for the fixed 5-year has exceeded that of the floating 10-year since the September 2025 offering, and the proportion of fixed 5-year bonds in sales has been increasing.
https://www.mof.go.jp/about_mof/councils/study_gov_debt_management/d20260526-2.pdf
Trends in the issuance amount of government bonds for individuals
The issuance amount of government bonds for individuals is at an unprecedented level. According to a compilation by nippon.com based on Ministry of Finance data, the issuance amount from January to August 2026 has already exceeded the total for the entire previous year.
Issuance amount of government bonds for individuals
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Jan-Aug 2026: 6.1967 trillion yen
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Year-on-year: 1.67 times
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Full year 2025: 5.2805 trillion yen
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August 2026 alone: 1.0177 trillion yen
The 1.0177 trillion yen in August is the first time a single month has exceeded 1 trillion yen since 2014, when the current format of issuing three types every month began. Kyodo News reported on January 17 that the issuance amount for fiscal year 2025 reached 4.5253 trillion yen by January, the highest level in six years. The growth since the start of 2026 has accelerated even further from that level.
Business Insider Japan, citing a report by the Nihon Keizai Shimbun, stated that the issuance amount of government bonds for individuals in the first half of 2026 was 1.6 times that of the same period the previous year, and sales via online securities firms increased by 4.4 times. The fact that the growth of online securities firms significantly exceeds the overall growth indicates that the purchaser base is expanding from existing customers of face-to-face financial institutions to those who trade online.
Purchaser base as seen in SBI Securities’ materials
SBI Securities’ materials submitted to a Ministry of Finance study group show the specific profile of individual government bond purchases.
Status of SBI Securities’ bond holdings
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Bond holdings: approx. 2.8 trillion yen
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Of which, government bonds for individuals: 555.9 billion yen
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Accounts with bond trading experience: approx. 2.4 times in 4 years
Purchaser attributes