Japan’s Muni Bond Yields Hit Decades High, Straining Finances

The first wave of Japanese local government issuers selling municipal bonds this year will face some of the highest funding costs in decades, as market yields rose after the Bank of Japan’s December rate hike and Prime Minister Sanae Takaichi’s plans for a snap election.

The average coupon on the mainstay 10-year tenor for the eight municipal bond issues priced through Jan. 15 is about 2.24%, the highest level since records began in 2006, according to data from the Japan Local Government Bond Association.