TOKYO (Reuters) - Foreign ownership of outstanding Japanese government bonds rose to a record at the end of September, Bank of Japan data showed on Friday, in a sign of growing reliance on overseas investors to fund the country’s large public debt.
Net assets in the household sector exceeded the government’s liabilities by the smallest margin on record at the end of September, the data also showed, suggesting Japan’s ability to rely on domestic assets to offset public debt is dwindling.
The Bank of Japan’s holdings of government debt also rose to a record at the end of September, as the central bank expands its monetary easing to help the economy emerge from almost 15 years of mild deflation.
Investors outside Japan held a record 9.1 percent of outstanding government debt, according to flow of funds data for the third quarter. That translates into 86 trillion yen $1.02 trillion (627.6 billion pounds) in debt holdings, up 11.1 percent from the same period a year earlier.
Overall, outstanding government debt at the end of September rose 3.0 percent from year ago to 948 trillion yen. Japan’s public debt burden is the worst among major economies at more than twice the size of its $5 trillion economy.
At the end of September, net household assets stood at 1,156 trillion yen, while government liabilities totalled 1,133 trillion yen. The difference between the two shrank to 22.4 trillion yen, the smallest surplus on record, according to the data.
The BOJ held a record 105 trillion yen in government debt at the end of September, which accounted for 11.1 percent of all outstanding debt.
Reporting by Stanley White and Sumio Ito; Editing by Eric Meijer