Japan Targets Retirees to Invest in Govt Bonds

Expanding efforts to attract buyers to the nation’s growing debt load, flooding the backs of taxi cabs for the first time with pamphlets in the hopes of getting retirees to invest more money in bonds according to this article from Bloomberg.

“Government bonds are worth another look,” the Ministry of Finance says in its latest advertisement, which features a picture of 37-year-old Junko Kubo, a former anchor on Japan’s public broadcaster NHK. Individuals can buy government debt at local banks for as little as 10,000 yen, or about $106, according to the ads. The ministry is hawking the bonds on its Web site with the slogan, translated from Japanese, “Peace of mind. Piece of happiness.”Bloomberg

“We are targeting those people with money for retirement,” said Masaaki Kaizuka, director of debt management policy for the government in Tokyo.

Finance Minister Kaoru Yosano is borrowing record amounts to help pull the economy out of its deepest postwar recession, increasing national debt to 684.4 trillion yen ($7.26 trillion). Besides taxis, the government is putting posters in banks and planning ads for television later this year.

The ministry is spending 650 million yen on bond ads for the fiscal year that ends March 31, which is “slightly” less than in the prior 12 months, Kaizuka said.

Baby Boomers

Kubo follows Koyuki, the actress and model who goes by one name and starred with Tom Cruise in “The Last Samurai” in 2003, who appeared in ads for Japan bonds that same year. The finance ministry in 2002 hired Koushiro Matsumoto, an actor in Kabuki theater, and model Norika Fujiwara in its bond campaigns.

Now Kubo is marketing bonds to the 17 percent of Japan’s 127.3 million people who are over 65. Japan’s so-called baby boomers, who were born from 1947 through 1949 and will start turning 65 in 2012, will have 80 trillion yen in pension funds to spend when they retire, government estimates show.

Households own 36 trillion yen of the nation’s debt, or about 5 percent of the market. Their ownership has doubled from 18 trillion yen five years ago, while holdings of stocks have fallen to 79.7 trillion yen from 205.8 trillion yen in 2007, Bank of Japan figures show.

The taxi ads offer “guaranteed rates,” with a floor of 0.05 percent, even if market rates fall below that, in line with the government’s efforts to focus on the safety of its debt.

The ministry’s latest ad campaign for bonds comes as Japanese stocks recover from last year’s rout. The Topix index is up 12 percent in 2009, after a record 41 percent decline in 2008. Japan’s economy expanded at an annual 3.7 percent pace in the three months ended June 30, growing for the first time in five quarters.