MNI BRIEF: Japan's Nippon Life To Boost Yen Bond Holdings

Japan's Nippon Life Insurance Company plans to increase its domestic bonds holdings, including 30-year Japanese government bonds, between October and March, the company’s chief fund manager said on Monday.

“We will buy a large amount of 30-year JGBs if its yield rises close to 2%,” Akira Tsuzuki, senior general manager of the finance and investment planning department, told reporters. He added that 30-year JGB yields around 1.5% were attractive level but the level is still lower than the company's 2% liability rate.

Nippon Life, the largest life insurer in terms of assets in Japan, increased its balance of domestic bonds, including hedged foreign corporate bonds and domestic corporate bonds, by JPY1.33 trillion to JPY39.55 trillion during the April-September period, Tsuzuki said.

The company expects the dollar to trade in a range of JPY131 to JPY159 and the euro between JPY126 and JPY154 at the end of fiscal year, and trade at around JPY145 and JPY140, respectively, at the end of March. The 10-year JGB yield is expected to move between -0.25% and 0.25%, which is consistent with the Bank of Japan’s preferred range, and it is expected to trade at around 0.20% at the end of March.

Nippon Life plans to sell hedged foreign government bonds in the wake of the rise in hedging-costs, after reducing its balance by JPY390 billion to JPY5.36 trillion for the April-September period. But the company plans to increase its purchases of hedged foreign corporate bonds to seek higher return, while planning to sell government bonds amid high hedging costs.