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--Dai-ichi Life: Plans to Lower Yen Bond Holdings in FY2019
--Dai-ichi Life: But Will Buy Yen Bonds If Yields Rise
TOKYO (MNI) - Dai-ichi Life Insurance, Japan's second largest Japanese life
insurer by assets, could cut or raise the balance of either unhedged and hedged
foreign bonds this fiscal year, the firm's chief fund manager said Monday.
The company plans to lower the balance of yen bond holdings during the
period, as interest rates based on the Bank of Japan easy policy are too low to
tempt investment, Akifumi Kai, general manager of the Investment Planning
Department at Dai-ichi Life told reporters.
But Kai said that the company will consider buying yen bonds if yields rise
to attractive levels, without elaborating such levels.
"We expect both interest rates and stock prices to move in a range for the
first half of the current fiscal year but they will be adjusted in the second
half of the fiscal year due to an economic slowdown around the globe," Kai said.
He added that the company will consider foreign bond purchases, while
closely looking at an interest rate gap between Japan and the U.S., along with
The company increased the balance of hedged foreign bond holdings in the
last fiscal year, but lowered the balance of unhedged foreign bond holdings
during the period.
The company will also consider investing money into foreign corporate bonds
and mortgaged-backed securities in a flexible manner.
His comments indicate that if the yen appreciated toward Y100, an upper
range of Y100 of Y114 that the company predicts, the firms would increase
purchase of unhedged foreign bonds.
Japan's life insurance firms favor long-term yen assets that match their
long-term yen liabilities but consider investments in hedged foreign bonds as an
alternative when domestic rates are low.
Dai-ichi life plans to further lower the balance of yen bond holdings for
the current fiscal year.
"The balance of yen bond holdings will fall due to the expected
redemptions. Whether we buy yen bonds or not depends on interest rate levels,"
Dai-ichi expects the 10-year JGB yield to move in a range of -0.20% to
0.20% in the current fiscal year. The 10-year bond yield at midday closed at
-0.035% on Monday.
The company expects the U.S. Treasury 10-year bond yield to move between
2.00% and 2.80%.
Dai-ichi expects the dollar will trade between Y100 and Y114 to the yen and
the euro will fluctuate between Y110 and Y135.
As of the end of December, Dai-ichi's assets totaled Y35.33 trillion, the
latest disclosure document showed.
The balance of yen bonds held by Dai-ichi Life stood at Y15.81 trillion
(44.8% of its total assets) at the end of December, down from Y15.91 trillion
(44.9%) at the end of March 2018.
The balance of foreign assets held by Dai-ichi Life, including bonds and
stocks, stood at Y9.14 trillion (25.9% of its total assets) at the end of
December 2018, up from Y8.94 trillion (25.2%) at the end of December 2018.
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