[Tade0]

For the longest time their strategy was to:

1. Issue bonds at near zero or even negative yield.

2. Buy US bonds.

The country is still one of the largest foreign US debt holders at $1.191T, and interest from this debt pays for a significant fraction of the interest on their own debt.

[d4ng]

If you issue debt at non-positive yield, then there is no interest on your debt to offset with the yield from US bonds.

[fhn]

I don't understand. Why would anyone buy their bonds when the US bonds yield more?

[d4ng]

The issuer of debt is the seller of the bond.

[sokoloff]

That doesn't the answer the question of "who is buying these bonds instead of US Treasuries?"

[d4ng]

Someone who is betting that the negative yield changes favourably. The bet is the same in positive yield regimes as well. This could happen due to a combination of deflation forecasts increasing and expectations of interest rates being lowered even further.