Bloomberg News

Japan’s Gold-for-Bonds Offer Could Boost Return By 5.9 Times

December 06, 2011

Dec. 6 (Bloomberg) -- Japanese Finance Minister Jun Azumi will be rewarding investors who buy reconstruction bonds with half an ounce of gold, an added incentive that could boost the return by nearly six times.

Individual investors who purchase more than 10 million yen ($129,000) in the debt with a 0.05 percent return and keep it for three years will receive a gold commemorative coin weighing 15.6 grams (0.55 ounces), the Finance Ministry said in Tokyo today, worth about $948 based on current prices for the precious metal.

The offer suggests the return could be boosted to 89,000 yen should gold prices remain at current levels, more than the approximate 15,000 yen one would receive from the bond. Azumi, whose hometown was devastated by the March 11 disaster, said today he bought 1 million yen of the debt to support rebuilding efforts from the earthquake and tsunami.

The coupon on conventional three-year retail government debt to be sold on Jan. 16 is 0.18 percent.

Only a limited number of coins, which will be issued as 10,000 yen currency, will be issued, the Finance Ministry said in a statement. Silver coins weighing 31.1 grams issued as 1,000 yen currency will be distributed to those who own more than 1 million yen of the bonds, the government said. The coins will be offered for debt going on sale in March.

All investors receive a thank-you note from the minister, who showed his to reporters in Tokyo today as proof of his purchase. Chief Cabinet Secretary Osamu Fujimura also bought the bonds, Azumi said, without saying how much.

--With assistance from Yuriy Humber in Tokyo. Editors: Lily Nonomiya, Ken McCallum

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

To contact the editor responsible for this story: Ken McCallum at kmccallum4@bloomberg.net


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