Global funds turned net sellers of Japanese government bonds last year as exceptionally low volatility reduced trading opportunities and as they poured money into supersafe treasury bills.
Overseas investors offloaded a net ¥2.79 trillion ($26.5 billion) of JGBs, the first drop since 2013, according to the latest balance-of-payments data. They still bought a total of more than ¥3 trillion of other types of Japanese debt — including bonds issued by government agencies, local governments and other entities — and a record amount of treasury-discount bills.
"Low yields and low volatility reduced speculative flows into long-dated debt aiming for capital gains,” said Naoya Oshikubo, a senior economist at Sumitomo Mitsui Trust Asset Management Co. in Tokyo. Foreign investors must have bought nongovernment debt "to profit from credit spreads and also due to speculation the spreads would shrink.”