Three of four major life insurers may buy more foreign bonds in fiscal 2014 ending next March to seek higher returns because yields on Japanese government bond yields are predicted to stay at rock bottom, their asset management plans showed Friday.
Life insurers are basically willing to buy safe-haven JGBs, but expectations are growing that the prices are unlikely to rise further because of the Bank of Japan’s massive debt purchases — part of the prime minister’s deflation-busting “Abenomics” strategy. This is prodding them to boost holdings of foreign bonds. Long-term interest rates move inversely to bond prices.
Dai-ichi Life Insurance Co. and Sumitomo Life Insurance Co. said they are eager to invest more in foreign bonds, while Nippon Life Insurance Co. said it may follow suit if JGB prices show no sign of climbing.
Meiji Yasuda Life Insurance Co. said that it plans to reduce purchases of JGBs. The yield on the benchmark 10-year Japanese government bond has been hovering at around 0.6 percent since last fall.