MNI: Japan Nippon Life To Buy More Yen, Unhedged Foreign Bonds

--Nippon Life: To Lower Balance of Hedged Foreign Bond Holding

     TOKYO (MNI) - Japan's Nippon Life Insurance Company will increase its

holdings of both domestic and unhedged foreign bonds this fiscal year after

increasing both assets in the last, the company's chief fund manager said

Thursday.

     The group is planning to increase the balance of domestic bonds by JPY1

trillion over the 12-month period.

     Nippon Life increased domestic bond holdings by JPY2.15 trillion to

JPY32.13 trillion and the balance of unhedged foreign bonds by JPY500 billion to

JPY6.2 trillion last year, Shinichi Okamoto, a senior general manager of the

Finance & Investment Planning Department at Nippon Life, told reporters.

     At the end of March, the balance of domestic bonds accounted for 48% of its

total assets, with unhedged foreign bonds accounting for a further 9%.

     Nippon Life plans to lower the balance of hedged foreign bond holdings

further after reducing the balance, including sovereign holdings, by JPY1.38

trillion to JPY7.17 trillion, which was 11% of total assets.

     With the interest rate gap between the U.S. and Japan narrowing, hedged

foreign bond investments are less attractive to lifers.

     Okamoto said that the company plans to reduce the balance of sovereign

bonds and increase the investment in corporate bonds and project finance to seek

higher return.

     --FLEXIBLE ON FOREIGN BONDS

     As for purchases of unhedged foreign bonds, Okamoto said that the company

will consider trading those bonds in a flexible manner, while controlling forex

and market risks.

     Out of the total foreign asset holdings of JPY20.2 trillion, about 60% were

in U.S. dollars, 30% in euros, 10% in sterling and the balance in other

currencies.

     Nippon Life forecasts the dollar will trade in a range of JPY100 to JPY120

and the euro between JPY110 and JPY130 in this fiscal year.

     The company will consider buying unhedged foreign bonds when the dollar

falls to near JPY100.

     Nippon Life expects new assets from insurance premiums to be about JPY1.5

trillion, excluding funding from repo transaction, in this fiscal year, compared

with JPY1.46 trillion last.

     Nippon Life has traditionally invested about 70% of total assets in

lower-risk instruments, mainly yen-denominated securities and hedged foreign

bonds, and about 30% in higher-risk assets such as domestic stocks, unhedged

foreign currency assets and real estate.

     The total assets held by Nippon Life at the end of March were estimated

JPY67.43 trillion, up JPY1.43 trillion from the balance of at the end of March

2019.

     Nippon Life expects the 10-year JGB yield to move between -0.3% and 0.10%

and the U.S. 10-year Treasury bond yield ranging 0.3% and 1.7% in this fiscal

year.

--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$$$,M$J$$$,MT$$$$,M$$FI$,MN$FI$,MN$FX$]