Funding

Features of JFM Bonds

JFM bonds are generally recognized as having high credit standing with the following features.

• JFM’s assets can be deemed to be highly stable based on the fact that JFM lends exclusively to local governments, and no local governments have ever defaulted.

• JFM has a solid financial foundation, backed by its reserve for interest rate volatility and the Fund for Lending Rate Reduction prescribed in the JFM Law.

• JFM is a joint funding organization established with a capital contribution from Japanese local governments encompassing all prefectures, cities, special wards of Tokyo, government-designated cities, towns and villages, as well as some local government associations.

• Under the JFM Law, local governments have an obligation to bear the costs necessary to satisfy all JFM obligations in the event JFM is to be dissolved and its obligations remain unpaid.

In addition to JGBs and local government bonds, interest received by foreign investors (non-residents, foreign corporations, etc.) on JFM’s domestic bonds in book-entry form as well as JFM’s international bonds (both of which include government-guaranteed bonds) shall be exempted from Japanese income tax, subject to certain procedural requirements.

Funding Plan for Fiscal 2025

For fiscal 2025, JFM plans to issue USD 7.3 billion of JFM bonds through these methods. Moreover, private placements with pension funds for local government officials are projected to amount to USD 3.3 billion in fiscal 2025. In addition to issuing JFM bonds, JFM plans to raise USD 0.5 billion through long-term bank loans. As for government-guaranteed bonds, JFM plans to issue USD 1.9 billion during fiscal 2025.

1. JFM Bonds (Non-government Guaranteed)

Domestic and Overseas Offerings

Notes:

1. Subject to change depending on lending status, market conditions and other factors.

2. Plan to issue 5-year domestic bonds as Green Bonds.

3. Open Issuance will be utilized to increase the amounts of each domestic public offerings, overseas offerings, long-term bank loans and to issue opportunistic issuance bonds.

4. Achieved amount for respective bonds includes the amount allocated from open issuance.

5. Totals may not add up due to rounding.

Private Placements with Pension Funds for Local Government Officials

2. Long-term Bank Loans

3. Government-guaranteed Domestic Bonds

Funding Activities

JFM issues JFM bonds (non-government guaranteed bonds to be issued through domestic public offerings or under the MTN Programme, or private placements with pension funds for local government officials) and government-guaranteed bonds for the purpose of refinancing existing government-guaranteed bonds of the Predecessor. In addition, long-term bank loans are also important for JFM’s funding operations.

In fiscal 2024, JFM raised a total of USD 12.2 billion, increased from the previous year. This was mainly the result of the issuance of government-guaranteed bonds.

As of 31 March 2025, outstanding bonds were USD 125.0 billion. Outstanding long-term bank loans totaled USD 3.5 billion. The total amount of outstanding bonds and long-term bank loans was USD 128.5 billion, which was comprised of USD 111.5 billion in the general account and USD 17.0 billion in the management account. Since the end of fiscal 2016, the outstanding debt volume in the general account has exceeded that of the management account due to the trend of the management account decreasing and the general account increasing.

Notes:

1. USD 1 = JPY 149.48 as of 31 March 2025.

2. Totals may not add up due to rounding.