Japan’s life insurers are likely to buy more domestic sovereign bonds this year after the end of negative interest rates in the country.
The companies will lay out their investment plans for the new fiscal year starting this month. Global investors pay close attention to the plans of life insurers, which have combined assets of $2.6 trillion, as they often move markets. There is a particular focus on whether they will repatriate funds. The insurers are also expected to flag the continued sale of foreign debt that is hedged against the yen’s appreciation because of the associated costs for protection.
In January, many of the insurers said they were holding off on purchasing Japanese government bonds (JGBs) due to low yields. The Bank of Japan removed the sub-zero interest rate and yield-curve control program in March and is predicted to further raise rates later this year. The yield on the 30-year sovereign securities, favored by life insurance companies to meet their long-term obligations, has risen almost 30 basis points this year to 1.92%, according to Bloomberg data.