Fitch: Japan’s Corporates Resilient to Super-Long Bond Yield Surge

Fitch Ratings said on May 29, 2025, that a recent spike in Japan’s 30- and 40-year government bond yields is unlikely to affect the credit profiles of rated Japanese issuers in the near term. While yields eased from record highs seen on May 22, concerns about quantitative tightening, fiscal policy, and inflation could drive them higher again.

Key insights:

* Super-long JGBs account for 11% of central government debt.
* Major banks are minimally exposed due to shorter JGB holdings, though regional banks carry more risk.
* Life insurers are buffered by accounting rules and solvency ratio reforms but may face modest pressure if lapse rates rise.
* About half of top Japanese corporates hold net cash, reducing exposure.
* Real estate is more rate-sensitive but supported by strong Tokyo rents.
* Auto ABS deals remain stable unless household financial stress worsens.

Fitch’s base case expects 10-year JGBs to rise to 2% by March 2026. While the impact on capital ratios and economic solvency is manageable for now, rising rates remain a key long-term credit factor.