Sales of Japan¡¯s government bonds for individual investors have surged past ?5 trillion ($32 billion) this year, the most since 2007, as rising interest rates draw household cash out of bank deposits after the Bank of Japan began tightening policy.

Issuance from January to December totaled about ?5.28 trillion, Ministry of Finance data shows. The five-year retail note issued in November carried a 1.22% coupon, almost 2.7 times the 0.46% offered a year earlier.

As the BOJ pares back the massive bond purchases of its ultraloose policy, households are taking a more active role in the JGB market. Higher yields and the product¡¯s safety, with virtually no risk to principal, are reviving demand.

Issuance this year has included about ?1.9 trillion of 10-year floating-rate government bonds, which is notable because their coupons adjust in line with broader interest-rate moves, making them especially attractive in a tightening cycle.

Kyoko Takahata, a 37-year-old homemaker in Okayama, bought a 10-year floating-rate government bond at her local bank branch in October last year after withdrawing savings.

¡°Rates were higher than on my deposits, there was a guarantee, and the floating rate made me think they would rise over time,¡± Takahata said. ¡°It won¡¯t beat inflation, I know, but stocks can lose a lot.¡± Purchasing JGBs is a safer way to grow the money she will need for her children¡¯s education and for retirement, she added.

Even a 10-year time deposit at Mizuho Bank pays about 0.5% for balances of ?10 million or more, underscoring why some savers are moving money into government bonds with noticeably higher returns.

Coupons on retail JGBs for January settlement are set at 1.1% for the three-year fixed, 1.35% for the five-year fixed and 1.23% for the 10-year floater. The five-year rate is the highest since 2007, while the floater offers a record high since its 2003 launch.

The issuance amount is set based on the total subscriptions submitted by individual investors.