Japan to issue Y400 bln JGBs for econ package-media

TOKYO, Sept 11 (Reuters) - Japan will issue new government bonds worth over 400 billion yen ($3.7 billion) to help finance a recently unveiled economic package aimed at helping businesses and individuals cope with high energy and food prices, the Nikkei business daily reported on Thursday.

The Ministry of Finance has been nailing down details on how to finance 1.8 trillion yen ($16.70 billion) of new spending measures in the package, which was compiled late last month.

The Nikkei said the ministry has decided to issue so-called construction bonds to help fund projects such as countermeasures against natural disasters and making schools more earthquake proof.

The government has vowed not to issue any new deficit-financing bonds to fund the extra spending as Japan is already saddled with huge public debt amounting to 1-½ times GDP, but has left room for the possible issuance of construction bonds.

Construction bonds, under Japan's fiscal law, can be issued only for public works and some other steps such as government lending.

But legal differences aside, likely issuance of construction bonds means an increase in new government debt, and thus the ministry has been trying to limit the size of the issuance.

But an extra 400 billion yen bond issuance is unlikely have a big impact on the bond market, which has been supported by concerns about the outlook for Japan's economy that is seen slipping into recession.

The Ministry of Finance is due to issue 105.1 trillion yen ($975 billion) in government bonds to the market via regularly scheduled auctions this fiscal year to next March. ($1=107.79 Yen) (Reporting by Yoko Nishikawa; Editing by Chris Gallagher)