To leave is to die a little. Sayonara, the OAT. Japanese investors own 23 trillion yen of French government bonds ($145 billion). But they hold more than their benchmarks recommend. Paris would have done without this calculation. Indeed, public debt reaches 119% of GDP and the 10-year rate is close to 5%.
What does this have to do with your bitcoins? The last major repatriation of Japanese capital dates from August 2024. BTC then went from around 65,000 to 49,000 dollars in one week.
French debt: Japanese overweighting in figures
The figures come from a Bloomberg analysis published on October 5. OATs (French government bonds) represent 6.6% of foreign debt held by the Japanese. This is therefore one point more than France's place in the Bloomberg Global Aggregate index excluding Japan. No other eurozone country is so overweighted in Japanese portfolios. On the other hand, Germany is under-represented by 2.34 points and Italy by 0.87.
Tokyo was seen as a loyal creditor. Its investors have kept their French securities during each political crisis in recent years. However, their assets have already fallen by 2.5% since the end of 2025. In fact, French paper has lost 4.9% this year, the fourth worst bond performance in the world. Furthermore, the 10-year rate is at its highest since 2002.
Why Tokyo is letting go of French bonds
The first motive is domestic. Rates are rising in Japan, local debt is becoming profitable again and the incentive to repatriate money is growing. A Japanese investor who buys an OAT protects himself against variations in the euro. But this currency hedging costs him dearly. Bloomberg did the counting. Once the protection is paid, the 10-year French bond yields around 0.40 points more than the Japanese bond. According to Masayuki Nakajima, strategist at Mizuho Bank, the gap is too small to compensate for the French budgetary trajectory.
Some have already decided. Thus, the global funds of Shinji Kunibe (Sumitomo Mitsui DS) sold all of their French securities. Hideo Shimomura, manager at Fivestar Asset Management, is betting on the decline continuing. “This is only the beginning,” he warns Bloomberg. He even mentions a French yield of up to 7% if the European Central Bank lets it happen. Antonio Del Favero (Macro Hive) fears the ripple effect. According to him, American, Asian and European managers who follow the same indices could also redo their accounts.
Bitcoin facing the repatriation of Japanese capital
Remember August 5, 2024. The Bank of Japan had just raised its rates and the yen was soaring. The Nikkei lost 12.4% in one session. Bitcoin also fell around 11% that day. Over the week, it went from around $65,000 to $49,000. The culprit is called the yen carry trade. This practice consists of borrowing from Japan for almost nothing and investing the money elsewhere. When the yen rises, you have to repay quickly, so sell what sells right away. Gold BTC quotes day and night.
But let’s be honest, the 2026 scenario is not that yet. Selling OATs to buy Bunds (German government bonds) leaves the money in euros. Moreover, the $145 billion at stake represents a fraction of a foreign portfolio of around $2.2 trillion. The signal to watch for is elsewhere. Bloomberg strategist Mark Cranfield looks at the Euro-Yen pair. Its decline would in fact indicate a return of capital to Tokyo. Moreover, the euro hit its lowest level since May 2025 against the dollar on Monday.
