Overseas credit is starting to look attractive to some major Japanese investors seeking to boost returns as the yen corporate bond market heads for its first annual loss in more than a decade.
Money managers including Fukoku Mutual Life Insurance and Meiji Yasuda Life Insurance have said they’re keen to take advantage of any easing in hedging costs to buy foreign debt, especially as a potential change to monetary policy at home makes them more cautious on longer-dated yen debt.
The renewed interest in foreign credit comes after crippling losses on fixed income globally coupled with a surge in the cost of currency protection had Japanese investors offloading overseas debt for a large part of 2022. But with bond markets recovering in recent weeks and the yen strengthening, the calculus is beginning to shift.