Government-Guaranteed Bonds in International Markets

Based on the Japan Bank for International Cooperation Act (Act No.29 of 2011, hereinafter referred to as the "JBIC Act"), the former Japan Bank for International Cooperation (hereinafter referred to as the "Former JBIC") as the international wing of Japan Finance Corporation (JFC), has been spun off from JFC as of 1 April 2012 and set off to a new start as the new JBIC (hereinafter referred to as "JBIC"). Based on the JBIC Act, all obligations that pertained to the bonds issued in relation to the Former JBIC account of JFC have been succeeded by JBIC as of 1 April 2012.

Pursuant to Articles 33 and 35 of the JBIC Act and Article 2, Paragraph 2 of the Act Concerning Special Measures with Respect to Acceptance of Foreign Capital from the International Bank for Reconstruction and Development, etc., JBIC is allowed to issue international bonds explicitly guaranteed by the Japanese government denominated in foreign currencies to fund its operations.

JBIC and its predecessors have issued government-guaranteed foreign currency bonds in international capital markets over the years since 1983 and JBIC enjoys high reputation as a leading Japanese public bond issuer in these markets. JBIC continues to issue international bonds explicitly guaranteed by the Japanese government in order to use their proceeds for its operations.

To sell government-guaranteed bonds in the United States market, JBIC and its predecessors have continuously filed with the U.S. Securities and Exchange Commission (SEC) a registration statement for foreign governments and political subdivisions, pursuant to the Securities Exchange Act, and registered for multiple issues of its securities. As part of the disclosure procedures for issuers in the U.S. securities markets, JBIC has filed its disclosure documents as required by SEC on their online database.

Issuance Plan and Policy

  • The maximum total funding volume of international bonds explicitly guaranteed by the Japanese government is determined through discussions with the Japanese government in the budgetary process during which JBIC prepares its operational and funding plans for its operations. In FY2016, the funding of JPY 1,240 billion equivalent is planned. As a policy-based financing institution with a mission to contribute to the sound development of Japan and the international economy and society, JBIC recognizes that international bonds explicitly guaranteed by the Japanese government are important instrument for funding foreign currencies for its operations.
  • The proceeds of issues will be used for providing foreign currency-denominated loans. As foreign currency financing has been growing in recent years, funding operations in international capital markets have become increasingly important. JBIC will thus seek to ensure continuous and stable fund-raising operations by expanding the investor base through our greater name recognition.

Characteristics/ Credit Ratings

  • All debt securities issued in international capital markets are backed by unconditional and irrevocable guarantee of the Japanese government for principal and interest payments.
  • Pursuant to Article 33 of the JBIC Act, the basic annual issuance policy for its debt securities, including government-guaranteed bonds, is subject to approval by the Minister of Finance.
  • The credit ratings for JBIC's government-guaranteed bonds are as follows.
Moody’s Standard & Poor’s
A1 A+
  • *As of February 15, 2017

Treatment of Outstanding Government-Guaranteed Foreign Currency Bonds issued by predecessor organizations (Excerpts from the JBIC Act (Act No. 39 of 2011))

JBIC has succeeded all liabilities of the outstanding issues of its predecessor organizations.

  • Article 12 of Supplementary Provisions (Succession, etc. of Rights and Obligations)
    • Among the rights and obligations which JFC has actually upon the establishment of JBIC, those rights and obligations related to the Japan Bank for International Cooperation's Former Operations, etc., except for the assets succeeded by the Government pursuant to the provisions of Paragraph 6 of this Article, shall be succeeded by JBIC upon the establishment of JBIC, pursuant to the written succession plan that prescribes the necessary matters concerning the succession of rights and obligations.
  • This means the rights and obligations arising from the outstanding debt securities of the Former JBIC shall be succeeded by JBIC.

Joint and several obligations with the JICA or JFC on outstanding debt securities issued by the predecessor organizations.

  • Article 17 of Supplementary Provisions (Transitional Measures Necessary in Connection with Succession of Rights and Obligations )
    • o If the obligations related to the Japan Bank for International Cooperation's Former Operations, etc. are succeeded by JBIC pursuant to the provisions of Paragraph 1 of Article 12 of the Supplementary Provisions hereof, the parties prescribed in each of the following Items shall jointly and severally be liable for repayment of the liabilities related to all of the bonds listed in each of such Items that have been issued at the time of such succession.
      • 1.The Japan Bank for International Cooperation Bonds set forth in Paragraph 1 of Article 45 of Japan Bank for International Cooperation Act prior to revision by the provisions of Article 11 of the Supplementary Provisions of the Act Concerning Partial Amendment of the Act on the Japan International Cooperation Agency, Independent Administrative Agency (Act No. 100 of 2006) and the foreign currency bonds, etc. set forth in Paragraph 1 of Article 39-2 of the Former Export-Import Bank Act:

        JBIC and the Japan International Cooperation Agency, Independent Administrative Agency

      • 2.Corporate bonds issued pursuant to the provisions of Article 49 and 50 of the Former JFC Act;

        JBIC and JFC

  • This means JBIC and JICA shall be jointly liable for obligations arising from the bonds issued before September 2008 by Japan Bank for International Cooperation, while JBIC and JFC shall be jointly liable for obligations arising from the bonds issued before March 2012 by JFC.

JBIC has succeeded all the guarantee contracts with the government with respect to the outstanding government-guaranteed bond issues of its predecessor organizations with the same conditions as before.

  • Article 16 of Supplementary Provisions (Transitional Measures Necessary in Connection with Succession of Rights and Obligations)
    • The guarantee contracts prescribed in each of the following Items and executed by the Government with respect to the liabilities related to the bonds listed in each of such Items and succeeded by JBIC pursuant to the provisions of Paragraph 1 of Article 12 of the Supplementary Provisions hereof shall survive such succession with the conditions in force before such succession with respect to such liabilities related to such bonds. With respect to public dues, such as taxes, on the interest and redemption gain on the bonds listed below and related to the guarantee contracts executed pursuant to the provisions of Article 2 of the Foreign Capital Acceptance Act among such guarantee contracts, the provisions in force before such succession shall remain applicable.
      • 1.Corporate bonds set forth in Paragraph 2 of Article 50 of the Former JFC Act:

        Guarantee contracts executed pursuant to the provisions of Article 55 of the Former JFC Act or Article 2 of the Foreign Capital Acceptance Act

      • 2.The Japan Bank for International Cooperation Bonds set forth in Paragraph 1 of Article 45 of Japan Bank for International Cooperation Act (Act No. 35 of 1999) prior to the abolishment made pursuant to the provisions of Article 42 of the Supplementary Provisions of the Former JFC Act (hereinafter referred to as the "Former Japan Bank for International Cooperation Act"):

        Guarantee contracts executed pursuant to the provisions of Article 47 of the Former Japan Bank for International Cooperation Act or Article 2 of the Foreign Capital Acceptance Act prior to revision by the provisions of Article 13 of the Act Concerning Adjustment of Relevant Acts as a Consequence of the Japan Finance Corporation Act (Act No. 58 of 2007)

      • 3.Foreign currency bonds, etc. set forth in Paragraph 1 of Article 39-2 of the Export-Import Bank of Japan Act (Act No. 268 of 1950) prior to the abolishment made pursuant to the provisions of Article 15 of the Supplementary Provisions of the Former Japan Bank for International Cooperation Act (hereinafter referred to as the("Former Export-Import Bank Act"):

        Guarantee contracts executed pursuant to the provisions of Article 39-3 of the Former Export-Import Bank Act or Article 2 of the Foreign Capital Acceptance Act prior to revision by the provisions of Article 23 of the Supplementary Provisions of the Former Japan Bank for International Cooperation Act

  • This means all the government guarantees with respect to JBIC's outstanding government-guaranteed bonds shall survive with the new JBIC with terms and conditions unchanged.

Statutory Lien

  • Article 34 (Statutory Lien)
    • A holder of JBIC's corporate bonds shall, with respect to the property of JBIC, have the right to have his/her receivables satisfied in preference to other creditors.
    • 2.The order of the statutory lien set forth in the preceding Paragraph shall be next to the general liens prescribed by the provisions of the Civil Code (Act No. 89 of 1896).

Dissolution and others

  • Article 42 (Merger, Company Split, Share Exchange, Assignment and Acceptance of Assignment of Business and Dissolution)
    • Notwithstanding the provisions of Part II, Chapters VII and VIII and Part V, Chapters II, III and IV, Section I of the Companies Act, the merger, company split, share exchange, assignment and acceptance of assignment of all or part of business, to which JBIC becomes a party, and dissolution of JBIC shall be provided for separately by an Act.
  • This means dissolution, etc. of JBIC cannot occur without necessary legislative measures.