The Gig is Up

Bottom Line: If the Japanese government continues to issue debt at the current pace, they will soon run out of buyers of their bonds.  When this happens, the gig is up.  Japan’s Government Pension Investment Fund (GPIF), historically a net buyer of JGBs holding 9.4% of all outstanding bonds, is a net seller today.  The reason is simply demographics.  The OECD estimates that almost a quarter of the Japanese population is over the age of 65 – roughly twice the OECD average. To help put this figure in perspective, consider that Unicharm’s sales of adult diapers in Japan exceeded those for babies for the first time last year, per Bloomberg.

But you have to give the Japanese some credit.  Apparently, the Ministry of Finance has even resorted to “geeky girl groups” to sell their bonds, per the WSJ.  If you need a refreshing break from all of the GR-EXIT talks lately (which we’ll be sure to comment on shortly), you can check out Japan’s all-star bond sales team on YouTube.  Wow.