MNI POLICY: Japan Nippon Life To Buy JPY1 Trln Yen Bonds in H2

Japan's Nippon Life Insurance Company plans around JPY1 trillion in yen bond purchases in the October-March 2021 period after a JPY2.34 trillion increase in the first 6 months of the fiscal year, the company's chief fund manager said Monday.

Nippon Life, Japan's largest life insurer in terms of asset, aims to boost mainly 20- and 30-year bond holdings by JPY500 billion, and corporate bonds by JPY500 billion, Toshinori Kurisu, deputy general manager of finance and investment planning department, said.

The company expects new assets from insurance premiums to be between JPY700 and JPY800 billion, excluding funding from repo transaction, with JPY300 billion coming in from sales of unhedged foreign bonds.

At the end of September, the balance of domestic bonds held by the firm totaled JPY35.2 trillion, or 51% of total assets.

HEDGED BONDS

Nippon Life sold unhedged euro bonds in H1 as hedging costs rose as the yen rose against the euro. The firm also sold hedged sovereign bonds, shifting allocations into domestic bonds.

The balance of hedged foreign bonds held by Nippon Life fell to JPY6.13 trillion, accounting for 9% of its total assets, down JPY7.48 trillion at the end of March.

The balance of unhedged foreign bonds fell to JPY6.39 trillion, down JPY310 billion for the first half of this fiscal year. Nippon Life plans to keep the balance of hedged foreign bonds and to reduce the balance of unhedged foreign bonds for the next six months to March 2021, although it can be flexible as interest and forex rates change.

Out of the total foreign asset holdings of JPY20.3 trillion, about 60% were in U.S. dollars, 30% in euros, 10% in sterling and the balance in other currencies. The company will consider buying unhedged foreign bonds if the dollar falls to near JPY100. It currently trades around JPY105.