MNI POLICY: Japan Dai-ichi Life Sees Yen Bonds Buys Up

--Lifer Says More Flexible On Foreign Bond Purchases

     TOKYO (MNI) - Dai-ichi Life Insurance, Japan's second largest life insurer

by assets, plans to increase its holding of yen bonds in the current fiscal year

after its holding fell in the 12 months to end-March, the company said

Wednesday.

     The life insurer is also ready to buy and sell both hedged and unhedged

foreign bonds as it eyes both interest rates and forex rates.

     The company didn't elaborate further on the extent is positioning may

change due to internal compliance rules.

     --HEDGING

     When considering buying hedged foreign bonds, the main focus will be the

spread between Japan and U.S. rates, along with hedging costs.

     With that interest rate gap narrowing, it is more difficult for lifers to

profit from hedged foreign bond investments.

     The company increased the balance of hedged foreign bonds last year, but

decreased the balance of unhedged ones.

     As for foreign bonds, Dai-ichi Life continues to mainly invest in corporate

bonds with a BBB or higher rating, with mortgaged-backed securities as an

alternative.

     The company expects the dollar to move in a range of JPY100 to JPY115 and

euro to move between JPY110 and JPY130 in this fiscal year.

     --BALANCES

     Dai-ichi assets at the end of December totalled JPY36.28 trillion, up from

JPY34.97 trillion at the end of March 2019.

     Through end-December, 46% of total foreign assets were in U.S. dollars, 30%

euro and 6.9% Australian dollar, with overall investments covering 25 foreign

currencies at the end of March, up from 8 currencies at the end of March 2009.

     The outstanding balance of yen bonds fell last fiscal year due to corporate

bond redemptions, with the balance at end-December JPY15.92 trillion, or 43.9%

of the total asset.

     Japan's lifers favor long-term yen assets to match liabilities, but

consider investments in hedged foreign bonds as an alternative when domestic

rates are low.

     Dai-ichi expects the 10-year JGB yield to move in a range of -0.20% to

0.20% in this fiscal year and expects the U.S. Treasury 10-year yield to move in

a range of 0.00% to 1.50%.

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