Japanese life insurers plan to raise foreign bond holdings

FXstreet.com (Barcelona) - The markets will soon find out the number of Japanese Life Institutional Insurers willing to commit capital on buying foreign bonds, although many still remain on the latest stages of examining these plans.

As Eamonn Sheridan of Forexlive notes: "The market is hungry for information." Up to today, only Nippon Life said ti may begin buying foreign bonds, although all the information remains very much locked.

From Reuters: " Nippon Life Insurer, Japan's biggest life insurer, said on Monday it plans to slow its increase in domestic bond investment in the current fiscal year to March 2014, but plans to raise unhedged foreign bond holdings at an appropriate time this fiscal year."

Eamonn went on noting "we expect more talk on Wednesday, with announcements expected from Meiji Yasuda Life Insurance Co. and Sumitomo Life Insurance Co. Then Thursday brings the regular report on flow of funds into and out of foreign bonds and stocks, and Japanese bonds and stocks (these figures showing net Japanese selling of foreign securities on the 11th of April were a precipitating factor in the yen buying that turned into a bit of a rout late that week and early the next) ."

Meanwhile, the Wall Street Journal reports that Asahi Mutual Life Insurance Co “will consider putting up to one-third of the ¥150 billion it has earmarked for domestic-bond investments into foreign bonds this fiscal year instead”,

The unusual volatility in the Japanese government bond market following the decision by the new BoJ leadership to embark upon a radical shift in monetary policies has been the catalyst leading to a fully-stretched rethink of strategies in life insurers.

Reuters cited Hiroshi Ozeki, manager in the finance and investment planning department of Nippon Life's: "We are currently taking a wait-and-see stance on interest rates as volatility has risen after the BOJ's bold monetary policy, and if interest rates hover at low rates, we may consider shifting to corporate bonds for credit spreads or hedged foreign bonds as options."

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