Japan is preparing to significantly expand short-tenor bond issuance to help fund its latest economic stimulus package, according to officials speaking to Reuters. The government plans to boost issuance of two- and five-year Japanese government bonds (JGBs), lifting total scheduled JGB sales for the fiscal year through March by roughly ¥7 trillion from the current ¥171.8 trillion target. Longer-dated supply, 10-, 20-, 30- and 40-year bonds, will remain unchanged.

The revised funding plan also includes an additional ¥6 trillion in treasury discount bills to strengthen near-term financing capacity. Monthly issuance of two- and five-year JGBs is expected to rise by ¥100 billion each from January. The proposal will be presented to primary dealers on Thursday before going to cabinet for approval on Friday, alongside the extra budget tied to the stimulus programme.