⁍ Japanese life insurers, among country’s largest institutional investors, are returning to the domestic bond market.
⁍ Many of them plan to increase their holdings of domestic fixed income assets while planning to reduce those of foreign debt.
⁍ Many investors are turning cautious about holding foreign bonds without currency hedges.
– For decades, Japanese life insurers have been among the biggest institutional investors in the world, scooping up foreign bonds to make up for low interest rates at home. But with the yield gap between Japan and the rest of the world shrinking, they’re returning to the domestic bond market, Reuters reports. “We have long been investing primarily in US dollar bonds, but now that their yields have fallen to so low, we are not in a position to buy them aggressively anymore,” says a manager at Meiji Yasuda Life. “We plan to increase the holdings of Japanese government bonds (JGBs) regardless of market environment. But if their yields rise further, we could consider accelerating buying,” says a rep at Dai-ichi Life.
Source: https://www.reuters.com/article/japan-insurer/wrapup-1-japanese-insurers-look-to-domestic-bonds-as-yield-gaps-with-foreign-peers-narrow-idUSL4N2HH1J0