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Japan's Nippon Life Insurance Company plans to buy more than JPY1 trillion of bonds, including longer-end JGBs and foreign corporate bonds hedged through forex swaps this fiscal year, the company's chief fund manager said Friday.
Half of the JPY1 trillion will be for JGBs with the balance for non-JGBs, including corporate bonds as the company seeks higher returns, Shinichi Okamoto, executive officer of finance and investment planning department, told reporters.
The company plans to increase hedged foreign bond holdings, both sovereign and corporate, this fiscal year, after decreasing them by JPY1.5 trillion via sales of sovereign debt last fiscal year. Nippon Life stands ready to buy and sell unhedged foreign bonds in a flexible manner, watching forex and interest rates, after a JPY920 billion decrease during the last fiscal year.
Okamoto said that the company has no plan to actively buy 30-year JGBs, although some will be purchased consistent with long-term liabilities, but said the company will increase 30-year buys, if the yield rises further.
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.
Nippon Life forecasts the dollar will trade in a range of JPY97 to JPY117 and the euro between JPY112 and JPY138 this fiscal year. The 10-year JGB yield is expected to move between -0.25% and 0.25% and the U.S. 10-year Treasury bond yield ranging 0.7% and 2.4% in this fiscal year.
The balance of domestic bonds held by Nippon Life totaled JPY36.42 trillion, or 51% of the total assets. The balance of hedged foreign bonds stood at JPY5.9 trillion and of unhedged foreign bonds was JPY5.57 trillion.