Bond market wary of Japan move to cut debt

TOKYO: Japan's government is likely to cut the spending plans it made during its election campaign earlier this year to help bring its large debt burden under control, but the bond market was wary of plans to boost issuance of long-term debt.

The government's decision to backtrack on major campaign promises that brought it to office in September will on the one hand reassure the bond market that it can achieve its self-imposed cap on new government bond issuance of 44 trillion yen.

But on the other hand, government sources said the Ministry of Finance plans to increase issuance of 30-year bonds in the fiscal year 2010/11, which could add further pressure to a market already worried about the government's fiscal discipline.