Japanese women are seeking men who invest in government bonds, according to an advertisement being run by the Ministry of Finance.
“I want my future husband to be diligent about money,” a 27-year-old woman says in an ad being run in free magazines promoting a fixed-rate, three-year note that Japan started selling last week. “Playboys are no good.” She’s one of five women featured in the page, which says “Men who hold JGBs are popular with women!!”
The ministry commissioned the ads to appeal to citizens for money at a time when record government borrowing threatens to outstrip demand. Prime Minister Naoto Kan, who took office yesterday, said he doesn’t have an instant fix to rein in the world’s largest public debt.
The government’s plan to attract marrying-age men comes after a campaign aimed at retirees started last August. That push featured Junko Kubo, a former anchor on Japan’s public broadcaster NHK, in ads placed in the backs of taxi cabs. Kubo followed Koyuki, an actress and model who in 2003 appeared in “The Last Samurai” with Tom Cruise as well as posters for government bonds.
“It strikes of desperation,” Christian Carrillo, a senior interest-rate strategist in Tokyo at Societe Generale SA said about the ad campaign. “I doubt this will be a successful strategy to attract retail investors.”
Individuals can buy government debt at local banks for 10,000 yen ($109) according to the ads. The finance ministry in 2002 hired Koushiro Matsumoto, an actor in Kabuki theater, and model Norika Fujiwara in its bond campaigns.
Japan’s government debt amounted to a record 882.9 trillion yen as of March 31, according to the Ministry of Finance. A 600 billion yen sale of 30-year bonds yesterday attracted bids for 2.25 times the amount on offer, the least since April 2004.
Japan has the world’s largest bond market, followed by the U.S., based on a ranking of 35 nations by the Bank for International Settlements in Basel, Switzerland, using data through September 2009. Kan, the former finance minister, takes office facing a debt burden that has increased by almost 80 percent in a decade and it is equivalent to 180 percent of the nation’s annual economic output.
“I don’t think fiscal rehabilitation can be done overnight,” he told reporters last week.
Moody’s Investors Service rates Japan’s debt at Aa2, the third-highest investment grade, with a stable outlook. Standard & Poor’s cut the outlook on Japan’s AA grade in January, citing diminishing “flexibility” to cope with the nation’s swelling debt load.
Former Prime Minister Yukio Hatoyama’s decision to quit last week “has no credit implications, but that in itself is positive news, given reports that Japan’s ship of state is rudderless,” Thomas Byrne, senior vice president of Moody’s, wrote in a statement released June 7.
“The world is full of dirty shirts in terms of excessive debt,” Bill Gross, who runs the world’s biggest bond fund at Newport Beach, California-based Pacific Investment Management Co., said in an interview June 4.
Japanese households have started to cut their holdings of the nation’s debt. Their ownership of government securities declined to 35 trillion yen as of Dec. 31 from a record 36.7 trillion yen a year earlier, according to the Bank of Japan.
Masaaki Kaizuka, director of debt management at the Ministry of Finance, aims to change that.
The ministry started selling three-year bonds tailored for individuals on June 3, after conducting a market survey that showed pent-up demand for shorter-term securities, Kaizuka said.
“What we can do is try to attract an untouched group of people to find a different sort of investor,” Kaizuka said. Shorter bonds are seen as safer because they mature faster.
This campaign for JGBs was crafted by Dentsu Inc., Japan’s largest advertising company, which the ministry chose through an annual bidding process, Kaizuka said.
“Retail government bonds, which provide the peace of mind that women want, are now available in three-year maturities with a fixed rate,” the ad says.
The bonds are called “Kotei3,” meaning “Fixed3” because they mature in three years.
Japanese government securities maturing in 2013 yield 0.176 percent as of 3:26 p.m. in Tokyo, versus 1.20 percent for same-maturity debt in the U.S.
The yield turns to about 1.38 percent in Japan after accounting for falling prices in the economy. The so-called real yield in the U.S. is negative 1 percent.
Japan’s bonds handed investors a 1.32 percent gain this year, versus 3.96 percent for sovereign debt globally, according to Bank of America Merrill Lynch indexes.