MNI: Nippon Life Says to Buy Yen, Foreign Bonds In 2H FY19

--Nippon Life: To Buy More Unhedged Foreign Bonds in 2H FY19 

--Nippon Life: To Lower Balance of Hedged Foreign Bonds

--Nippon Life: To Buy 20-Yr JGBs if Yield Rises toward 1%

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

holdings of unhedged foreign bonds in the second half of fiscal year ending

March 31, 2020, after increasing holdings by Y420 billion in the first half, the

company's chief fund manager said Tuesday.

     The company expects the balance of hedged foreign bond holdings to fall

during 2H after reducing the balance by Y390 billion in April-September,

Shinichi Okamoto, a senior general manager of the Finance & Investment Planning

Department at Nippon Life, told reporters.

     --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 risks

of foreign exchange moves in response to developments in foreign exchange and

interest rates."

     The company will consider buying unhedged foreign bonds when the dollar

rises to near Y100, Okamoto indicated.

     Nippon Life forecasts the dollar will trade in a range of Y95 to Y115 and

the euro between Y110 and Y130 at the end of March 2020.

     Out of the total foreign bond holdings of Y15.2 trillion, about 60% were in

U.S. dollars, almost 30% in euros, nearly 10% in sterling and the remaining

small amount in other currencies.

     --Sell Hedged Treasury

     In managing the U.S. Federal Reserve's rate cut, Okamoto sees hedging costs

as still high and the company plans to sell hedged U.S. Treasury and to buy

corporate bonds and project financing to seek higher return.

     The company will increase the balance of domestic bond holdings in

October-March after increasing Y890 billion during April-September, Okamoto

said, adding that JGBs accounted for about 10-15% of the Y890 billion and the

remaining in corporate bonds or hedged foreign bonds and others.

     The current yields on 20- and 30-year JGBs are too low to make buying

attractive, but the company will reconsider when their yields rise toward 1%,

Okamoto said.

     Nippon Life expects new assets from insurance premiums to be about Y760

billion, excluding funding from repo transaction, in October-March. That is

similar to about Y760 billion for the first half of the fiscal year.

     --Hedged Foreign Bonds

     At the end of September, the balance of hedged foreign bonds held by Nippon

Life stood at Y8.75 trillion, or 13% of its total assets, and the balance of

unhedged foreign bonds was Y6.5 trillion, or 10% of the total.

     The balance of domestic bonds held by Nippon Life totaled Y30.89 trillion,

or 46% of its total assets.

     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 September were estimated

Y67.39 trillion, up from Y66.83 trillion at the end of March.

     Nippon Life expects the 10-year JGB yield to move between -0.4% and 0.00%

and the U.S. 10-year Treasury bond yield ranging 1.1% and 2.1% at the end of

March 2020.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

[TOPICS: M$A$$$,M$J$$$,M$$FI$,MN$FI$,MN$FX$]