Prime Minister Taro Aso, whose approval rating has slumped, may still have the support of bondholders due to perceptions that the current administration is more reluctant to sell debt than a new government formed by the opposition might be.

"As a bond investor, I want the ruling party to continue," said Yuuki Sakurai, general manager of financial and investment planning at Fukoku Mutual Life Insurance Co., which manages the equivalent of $54 billion in assets. "The current minister of finance is very keen on protecting the balance sheet of Japan. If the opposition wins, they will try to put more cash into the economy, putting the fear back into the bond market about issuance."

Bond investors are concerned that the Democratic Party of Japan, the largest opposition force, would boost spending, adding to the ruling Liberal Democratic Party's ¥10 trillion in fiscal measures announced in December and additional stimulus plans currently in discussion. The daily Mainichi Shimbun reported Friday the package may total ¥20 trillion.

Ten-year bonds have fallen this year, with yields increasing 15 basis points, or handing investors a loss of 0.5 percent, on concerns that the market will struggle to absorb additional supply.

"Economic indexes showing record bad figures should push yields down, but depending on politics," yields may rise to as high as 1.6 percent next fiscal year starting April 1, Sakurai said. As prime minister, Aso, whose LDP has ruled Japan for all but 10 months since 1955, must call a general election by September.

Should Sakurai's prediction prove accurate, investors who buy 10-year debt Friday may risk making a loss of 1.8 percent by September, according to Bloomberg calculations.

Aso's popularity has plunged as lawmakers from both sides of the Diet criticized his handling of the economic crisis, while scandals and misstatements have drawn the public's ire. The world's second-largest economy shrank at the fastest pace since 1974 in the three months to Dec. 31, causing the Nikkei 225 stock average to plunge to a 26-year low.

Aso should call a general election as soon as the Diet approves supplementary budget legislation, said Makoto Koga, chief strategist for the LDP.

"I'll tell the prime minister that once we've passed the bill, the timing would be good for disbanding the Lower House," Koga said on March 1.