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The sale of such bonds would allow the Japanese government to lock in cheap long-term funds and provide higher returns to investors eager for earnings. The issue of 50-year bonds has become a hot topic after Bank of Japan president Kuroda commented on the idea this month.
The issuance of 50-year bonds can also help prevent the excessive decline of the yield of ultra long-term bonds, thus providing the Bank of Japan with a new tool to implement the "yield curve control" (YCC) policy. Excessive falls in long-term debt yields can hurt pension fund returns.
There is no immediate plan to issue such bonds in Japan, officials from the Ministry of Finance told Reuters, but it has long considered the idea and held hearings with market participants three years ago.
Officials at the Ministry of Finance said the plan was rejected because of less demand from investors.
"The plan has not been completely ruled out and may be considered in the long run," another finance ministry official said.
The issuance of 50-year bonds could divert liquidity from other overlong bond markets, making yields prone to sharp fluctuations, finance ministry officials said. It is not clear whether there will be large volume of 50-year bonds. If the yield soars, investors may suffer huge losses.


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