Japanese Insurers Detail Further Plans to Up Long JPY Bond Exposure in H2

Further updates on bond holdings from Japan’s insurers, uniformly looking to up JPY bond exposure, while many cite high hedging costs as a deterrent for buying foreign bonds:

• Sumitomo Life plans to further increase JPY bond holdings at a similar pace as H1 (“several hundreds billions of yen”), mainly 30-year JGBs, and hedged US corporate bonds across H2 this fiscal year. They state that “The current 30-year JGB yield is attractive level for us.” They see the BOJ scrapping YCC and removing the negative interest rate in April 2024 after wage hikes are confirmed.
• Separately, Dai-ichi Life outlined their plans to further increase holdings of JPY bonds, mainly 30- and 40-year JGBs, but will increase its purchase of yen bonds if yields rise. They expect the BoJ to adjust easy policy as early as this month, and remove negative interest rates or scrap YCC in the January-March period. They have reduced the balance of hedged foreign bonds for April-September period, mainly USTs as hedging costs have risen sharply.

Nippon Life and Japan Post’s updates here: https://marketnews.com/nippon-life-to-persist-with-foreign-bonds-despite-higher-hedging-costs