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Dai-ichi Life Insurance plans to boost its holding of yen bonds this fiscal year, building on the increased balance through the last fiscal year, the company's lead fund manager said Thursday.
As for hedged and unhedged foreign bond investment, the company plans flexible two-way trade as it watches rates and forex developments, Akifumi Kai, general manager of the investment planning department at Dai-ichi Life, told reporters.
"We will increase purchases of unhedged foreign bonds," such as agency and corporate bonds, if we don't see the chance of a sharp yen rise, he added.
Dai-ichi Life increased hedged foreign bond holdings in the last fiscal year, although the company has reduced unhedged holdings. Kai didn't elaborate further on how positioning may change due to internal compliance rules. Japan's lifers favor long-term yen assets to match liabilities, with hedged foreign bonds an alternative when domestic rates are low.
Japan's second largest life insurer by assets, Dai-Ichi expects 10-year JGB yield to move in a range of -0.25% to 0.25% this fiscal year, which is consistence with the Bank of Japan's clarified range. The company expects the dollar to move in a range of JPY100 to JPY115 and euro to move between JPY120 and JPY140 this fiscal year. The company expects the U.S. Treasury 10-year to move in a range of 1.25% to 2.25%.
The balance of yen bonds at end-December stood at JPY16.51 trillion, or 43.2% of its total asset, up from JPY15.87 trillion at the end of March 2020. The balance of foreign currency assets totaled JPY10.95 trillion, or 28.7% of its total asset, up from JPY9.57 trillion at the end of March.