TOKYO - The Finance Ministry on Tuesday raised the coupon rate for a new 10-year Japanese government bond issue to 3.1 percent, the highest in about 30 years, reflecting a recent rise in long-term interest rates.
The coupon rate -- the interest rate stated on bonds at their issuance -- rose from 2.7 percent set in the previous auction in September.
The rate increase comes as rising oil prices have fueled concern about inflation, while upward pressure on long-term U.S. interest rates has also spilled over to Japan.
In the bond market, the yield on the newest issue of Japan's 10-year government bonds topped 3.0 percent on Sept. 1 for the first time in about 30 years and rose further to 3.115 percent at one point on Sept. 25.
The coupon rate, revised once every three months in principle, was set at 2.1 percent for the January-March period, 2.4 percent for April-June and 2.7 percent for July-September.
By setting the coupon rate closer to market rates, the government can more easily secure the funds it needs through bond issuance.
In an auction held later Tuesday, the No. 384 issue of benchmark long-term bonds drew 7,401.1 billion yen ($46.6 billion) in bids, of which the ministry accepted 1,966.1 billion yen. The bonds will be issued on Wednesday and will mature on Sept. 20, 2036.
Under the Bank of Japan's monetary easing policy, the coupon rate on 10-year government bonds was mostly below 1 percent at auctions from 2013 to 2024.
Higher interest rates will increase the government's debt-servicing costs, placing additional strain on the fiscal health of the heavily indebted nation.
