Foreign ownership of Japanese govt debt falls from record

Foreign ownership of Japanese govt debt falls from record

TOKYO - Foreign ownership of outstanding Japanese government bonds at the end of December fell from September's record, Bank of Japan data showed on Monday, suggesting overseas investors may be hesitant to further increase debt purchases as the yen weakens.

Investors outside Japan held 8.7 per cent of outstanding government debt, according to flow of funds data for December.

That translates into 84 trillion yen (S$1.1 trillion) in debt holdings, up 7.4 per cent from the same period a year earlier.

At the end of September, foreign investors held 86 trillion yen of government debt, which accounted for a record 9.1 per cent the Japanese government's debt stock.

Net household assets at the end of December exceeded government liabilities by a wider margin when compared to the end of September, but this is unlikely to ease concern about Japan's public debt burden, which rose to a record amount.

The Bank of Japan's holdings of government debt rose to a record at the end of December, as the central bank expands its monetary easing to help the economy emerge from 15 years of mild deflation.

The BOJ held a record 115 trillion yen in government debt at the end of December, which accounted for 12.0 per cent of the outstanding debt.

Overall, outstanding government debt at the end of December rose 4.4 per cent from year ago to a record 960 trillion yen.

Japan's public debt burden is the worst among major economies at around twice the size of its US$5 trillion (S$6 trillion) economy.

At the end of December, net household assets stood at 1,193 trillion yen, while government liabilities totaled 1,112 trillion yen. The difference between the two widened to 81 trillion yen, up from a 22.4 trillion yen margin at the end of September, according to the data.

In the fourth quarter of last year the yen fell 10.1 per cent versus the dollar on growing expectations that the BOJ would increase its purchases of government debt to lower bond yields and help end deflation.

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