Individual investors in Japan are rapidly increasing their purchases of retail government bonds. As of August 2026, the issuance of retail Japanese government bonds (JGBs) has already surpassed the total volume for 2025, reaching ¥6.2 trillion from January to August, which is 1.7 times the amount issued during the same period last year. This surge is attributed to the Bank of Japan ending its ultra-loose monetary policy, leading to positive interest rates. For instance, interest rates on 3-year and 5-year retail government bonds, which were 0.05% and 0.25% in March 2024, have now risen to 1.71% and 2.06% respectively for September issuances, making them significantly more attractive than bank time deposits.
This shift is driven by the desire for higher returns in an environment of positive interest rates and inflation concerns, moving away from traditional low-yield bank deposits. According to the NLI Research Institute, if funds held in time deposits by people in their seventies were entirely moved to retail JGBs, their annual after-tax interest income could increase by over ¥70,000. The government is also actively promoting these sales to diversify its funding sources, especially as the Bank of Japan scales back its bond purchases. Proposals are even emerging to make retail bonds eligible for the Nippon Individual Savings Account (NISA) tax-exempt investment system to further boost their appeal.
Corporate retail bond sales are also seeing a significant increase, with SoftBank Group recently pricing a ¥1 trillion ($6.3 billion) retail bond with a 4.75% coupon, a rate considerably higher than the 2.3% average for yen-denominated retail corporate bonds issued this year. This offering has expanded Japan's retail corporate debt market, pushing SoftBank Group's share of outstanding corporate retail bonds to nearly 50%. The overall issuance of yen-denominated retail corporate bonds reached ¥2.88 trillion so far this year, exceeding all previous full-year totals. This growing market for retail bonds provides companies with diversified funding sources and offers individual investors attractive alternatives to bank deposits and stocks, especially with the 10-year JGB yield topping 3% for the first time in about 30 years.
Younger investors are also entering the retail bond market. Online brokerages reported sales of ¥540 billion ($3.46 billion) in retail government bonds during the first half of this year, a 4.4-fold increase from the same period last year. Buyers in their 30s and under now account for approximately 20% of retail bond purchases, a notable increase from previous years when the market was dominated by older investors. The 10-year floating-rate retail bond, for example, now yields 1.95%, significantly outpacing the 1.25% annual rate on 10-year fixed-term deposits at major Japanese banks, drawing a broader demographic to these safe-haven assets.
