The volatility in the Japanese government debt market has unnerved investors in domestic banks, with some of the country’s biggest lenders alone holding an estimated 40 trillion yen ($390 billion) worth of these bonds.
A spike on Thursday in the benchmark 10-year Japanese government bond (JGB) yield to 1 percent – its highest level in a more than a year – fanned worries about the potential for massive paper losses for banks and led to heavy selling in banking stocks listed on the Nikkei.
Mitsubishi UFJ Financial, Japan’s largest lender by assets, has about 48.7 trillion yen worth of JGBs, according to the bank’s latest financial statement.
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