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Updated February 5th, 2024 at 17:12 IST

Nippon Life Insurance expedited acquisition of Japanese bonds in Jan: Akira Tsuzuki

Although showing a lack of urgency in acquiring JGBs for fiscal 2023, Nippon Life intensified its buying efforts post the Bank of Japan's policy meeting in Jan

Business Desk
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Flag of Japan | Image:Pixabay

Nippon Life Insurance, the largest private asset owner in Japan, has expedited its acquisition of long-dated Japanese government bonds (JGBs) in January, according to Akira Tsuzuki, the executive officer and general manager of finance and investment planning. Despite a lack of urgency in purchasing JGBs throughout fiscal 2023, which concludes in March, the company increased its buying activity following the Bank of Japan's policy meeting on January 22-23, as reported in an interview with Reuters.

The move comes in response to rising JGB yields after the central bank hinted at an increased likelihood of achieving the government's inflation target, leading to speculation about a potential policy shift in the upcoming spring. Nippon Life's primary focus in JGB investments is on 30-year bonds, deeming a yield above 1.83 per cent as an appealing level, Tsuzuki stated.

The 30-year bond yield has remained close to this threshold in the days subsequent to the BOJ's two-day meeting in January, briefly reaching 1.86 per cent. Regarding BOJ policy expectations, Nippon Life anticipates the central bank to conclude its negative interest rate policy in the first half of the 2024 fiscal year, spanning from April to September. Any decisions to raise rates after policy normalisation will be contingent on economic conditions, with Tsuzuki emphasising that such adjustments would likely be incremental.

In addition to JGBs, Nippon Life has diversified its investments by entering the foreign sovereign bonds market across various currencies, including the US dollar, since the autumn. To mitigate the risk of yen appreciation, the company has employed options trading strategies.

(With Reuters Inputs)

Published February 5th, 2024 at 17:12 IST

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