MNI: Japan Dai-ichi Life More Flexile On Foreign Bond Buys

     TOKYO (MNI) - Dai-ichi Life Insurance, Japan's second largest Japanese life

insurer by assets, will be more flexible in considering increasing holdings of

unhedged and hedged foreign bonds in the second half of this fiscal year, the

firm's chief fund manager said Thursday.

     The company expects the balance of yen bond holdings to be unchanged during

the period, as interest rates based on the Bank of Japan's easy policy are too

low to tempt investment, Akifumi Kai, general manager of the Investment Planning

Department at Dai-ichi Life told reporters.

     --HEDGING

     When the company considers buying hedged foreign bonds, it will be focused

on the interest rate spread between Japan and the U.S., along with hedging

costs.

     "But buying hedged foreign bonds is attractive for us, judging from

prolonged low interest rates in Japan," Kai said.

     He added that the hedging costs linked to the dollar are high, but are set

to fall in the wake of rate cuts by the U.S. Federal Reserve.

     The company has no plan to sharply increase the balance of unhedged foreign

bond holdings, but Kai said it will consider buying unhedged foreign bonds when

the yen strengthens above the upper end of its forecast range, such as a range

of Y100 to Y110.

     The company increased the balance of hedged foreign bonds in the first

quarter of this fiscal year but the balance of unhedged one fell.

     Dai-ichi life increased the balance of yen bond holdings by Y120 billion

for the April-September period but the company expects the balance to be flat

for the second half of this fiscal year.

     Japan's life insurance firms favor long-term yen assets to match their

long-term yen liabilities but consider investments in hedged foreign bonds as an

alternative when domestic rates are low.

     Dai-ichi expects the 10-year JGB yield to move in a range of -0.40% to

0.00% in the October-March period and expects the U.S. Treasury 10-year yield to

move in a range of 1.00% to 1.80%.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: M$A$$$,M$J$$$,M$$FI$,MN$FI$,MN$FX$]