Japan's life insurers to buy more super-long bonds as yields hit multi-year highs
26/10/2022 11:22
By Kevin Buckland and Tomo Uetake
TOKYO, Oct 26 (Reuters) - Japanese life insurers plan to
buy more super-long government bonds, enticed by the highest
yields since 2014.
Nippon Life, Japan Post Insurance and Sumitomo Life are
among the insurers that have detailed their investment plans for
the rest of the fiscal year-ending April at briefings over the
past several days.
A common theme has been an intention to increase holdings of
the longest-maturity JGBs, centered on the 30-year securities,
which now offer "attractive" yields as well as being a safe
haven from a long list of market uncertainties globally.
Many insurers also plan to shift some money from
currency-hedged holdings of foreign bonds into yen bonds, with
hedging costs soaring.
"There is now an attractiveness to Japanese government
bonds," while "the attractiveness of hedged foreign bonds is
waning," a Japan Post Insurance representative told a briefing
on Friday. "We have already been shifting from hedged foreign
bonds into JGBs, and we will continue to do so."
Yields on 30-year JGBs JP30YTN=JBTC soared as high as
1.685% on Thursday for the first time since September 2014,
while the 20-year yield JP20YTN=JBTC reached the highest since
February 2015 at 1.315%. Both fell back as investors scooped up
the discounted debt.
Yields came under further downward pressure on Wednesday
amid a decline in U.S. yields and as the Bank of Japan bought
additional bonds ahead of a two-day policy-setting meeting that
begins Thursday.
The 30-year bond last yielded 1.54% with the 20-year at
1.18%.
"Anything above 1.5% and we can consider additional
investment" in 30-year JGBs, said a representative from Sumitomo
Life at a briefing on Tuesday.
Nippon Life is being more cautious.
"It's true that it's the easiest environment to invest for
the past several years," a representative of the company, also
known as Nissay, said on Monday. "Because yields are at 1.5%, if
the question is whether we can now buy actively, we're still a
long way from that point."
(Reporting by Tomo Uetake and Tokyo markets team; Writing by
Kevin Buckland; Editing by Mike Harrison)
((Kevin.Buckland@thomsonreuters.com;))