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BofA: Lifers Plan To Add JGBs, But May Not Step Up Buying In H2

JAPAN

Bank of America note that "the nine leading life insurers announced their FYH221 (Oct '21-Mar '22) investment plans. These plans suggest the life insurers will continue to buy superlong JGB investments in H2. However, based on our estimates, the life insurers have progressed asset-liability matching (ALM) over years and they added a significant amount of superlong JGB last fiscal year. Accordingly, lifers may not need to accelerate investment in superlong JGBs in H2, especially when the interest rate gap is widening between foreign and domestic bonds. We think faster policy divergence than previously expected could lead to more unhedged foreign bond investment by lifers, supporting USD/JPY."

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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