MNI: Japan Nippon Life To Up Yen Bonds, Hedged Foreign Assets

Japan's Nippon Life Insurance Company will increase domestic bond holdings, mainly longer Japanese government bonds and hedged foreign floating assets transferred to yen interest rates, this fiscal year, the company’s chief fund manager said Wednesday.

The company also plans to increase the balance of hedged corporate bonds to seek higher return, Akira Tsuzuki, senior general manager of finance and the investment planning department, told reporters. He expects the 10-year JGB yield to move in a range of 0.6-1.2% by March 2025, the end of this fiscal year.

Nippon Life plans to keep the balance of unhedged foreign bond holdings unchanged or to lower the balance slightly this fiscal year.

However, the company will consider flexible investment in unhedged foreign bonds, depending on interest rate and foreign exchange developments, while paying attention to the risk of the yen’s rise, Tsuzuki said.

The firm expects interest rates in Japan to rise gradually following further Bank of Japan policy rate increases, while U.S. inflation will continue to fall, however, the pace should decrease, Tsuzuki added.

He predicted U.S. interest rates would stay at high levels, while the U.S. dollar will likely trade in a range of JPY120-JPY150 by March 2025. The U.S. 10-year interest rate will likely move in a range of 2.0-5.0%, he added.

Nippon Life increased the balance of domestic bond holdings by JPY710 billion last fiscal year to JPY42.61 trillion, about 54% of its total JPY79.36 trillion assets. The increase of new assets from insurance premiums last fiscal year was JPY1.5 trillion. The company increased the balance of unhedged foreign bond holdings by JPY370 billion last fiscal year to JPY3.96 trillion.