📝Possible to See JGB Issuance Suspended In Extreme Market Cases: MUFG

a wide range of opinions were received and a decision was made to increase the amount of 5-year JGBs, which have a relatively small issuance amount (Graph 1). In order to minimize medium- to-long term financing costs, we expect the key will be the trade-off balance between interest payments (funding costs) and refinancing risk (interest rate fluctuation risk). Reducing issuance of super-long JGBs and increasing short/medium-term JGBs will reduce interest payment burdens, but refinancing risk will increase (Graph 2). If we assume that the BoJ will gradually raise interest rates further, we cannot ignore refinancing risk. Market liquidity will also become an important consideration. In extreme cases, it should be possible to reduce the amount issued to zero (suspend issuance). That said, market instability caused by reduced liquidity and the loss of stable financing means could lead to higher medium/long-term financing costs. - MUFG .