Key Characteristics of JGBs
Bond structure, types, maturities, and essential features of Japanese Government Bonds
Basic Bond Structure
While JGBs come in many maturities and are issued for various purposes, they share a common structure defined by the Ministry of Finance:[^1]
- Face Value: The principal amount. Standard JGBs (2, 5, 10, 20, 30, and 40-Year bonds) have minimum denominations of ¥50,000, while Retail Investor Bonds have ¥10,000 minimums.
- Coupon Payments: Interest is paid semi-annually (twice per year, every 6 months).
- Maturity Range: The MOF issues debt across the entire yield curve, from short-term bills to 40-year bonds.
- Currency: All standard JGBs are denominated in Japanese Yen (JPY).
Example: The Current Benchmark 10-Year JGB
The most recently issued (otherwise known as the 'current' or 'on-the-run') 10-year JGB as of November 03, 2025:
| Current Benchmark (#380) | |
|---|---|
| Issue Number | #380 |
| Annual Coupon Rate | 1.7% |
| Maturity Date | 2035-09-20 |
| Coupon Frequency | Semi-annual (every 6 months) |
| Face Value | ¥100 per unit (institutional trades in multiples of millions) |
| Settlement | T+1 (one business day after trade) |
| Day Count Convention | Actual/365 (This is the rule for calculating interest, explained in a later section) |
Bond Cash Flow Visualization (10-Year JGB, ¥1,000,000 Face Value)
Using live data from MOF benchmark 10-year JGB (Issue #380, 1.7% coupon)
| Payment Period | Payment Date | Days from Issue | Coupon Payment | Principal Repayment | Total Cash Flow |
|---|
Types of JGBs by Maturity
The MOF issues several types of securities. The most important for market participants are the coupon-bearing bonds:[^2]
| Security Type | Maturity | Key Characteristics & Primary Investors |
|---|---|---|
| Short-term Bills (T-Bills) | 3-mo 6-mo 1-yr | These have maturities of 3-months, 6-months, or 1-year. They do not pay a coupon and are instead sold at a discount to their face value. |
| Medium-term Bonds | 2-yr 5-yr | Popular with commercial banks for managing their liquidity and interest rate risk. More responsive to changes in the Bank of Japan's short-term policy interest rate. |
| Long-term Bonds | 10-yr | The Benchmark Bond: This is the most important JGB. It is the most actively traded (liquid) and serves as the primary reference point for the entire Japanese financial market, from corporate loans to mortgage rates. |
| Super Long-term Bonds | 20-yr 30-yr 40-yr | Primary Investors: These are crucial for pension funds and life insurance companies. These investors have "long-term liabilities" (payouts they must make in 30+ years), and they buy these long-dated bonds to match those future obligations (a strategy called Asset-Liability Matching or ALM). |
| Inflation-Indexed Bonds (JGBi) | 10-yr | These are 10-year bonds whose principal (and thus coupon payments) is adjusted based on the national Consumer Price Index (CPI). They provide investors with direct protection against inflation, but make up a very small and illiquid portion of the market. |