The demand is a reflection of the cashed up baby boomers who don't want to take risk, but get some sort of yield, however its basically unavailable to them due to the zero interest rate environment. This is a very big reason why the stock markets are where they are, the alternative is zero or even negative return!
Japan is funded by its own people, but its the older generation that has done this & they are now starting to redeem rather than increase holdings as they fund their retirement. One of the reasons Abe is so keen on driving up inflation is he realizes that Japan will need to start funding their debt from foreign investment & to attract that they need to be able to give higher returns.
The global bond market is a bigger bubble than equities & at some stage will unravel.
Investing in basically insolvent governments to get a zero return hardly seems like good risk/return to me.
