“If the BoJ won’t do anything, it is also okay for us not to do anything as well,” Meiji Yasuda's Kitamura said.
TOKYO: Meiji Yasuda Life Insurance Co will likely wait until yields rise on Japan’s super-long sovereign bonds before it starts buying them again.
Japanese life insurers are the main buyer of bonds due in more than 10 years and typically increase purchases toward the end of the fiscal year. Investor appetite has been sluggish amid falling yields, with that on benchmark 30-year securities declining to 1.58% on Monday from a decade-high of about 1.9% reached in November.
Speculation about an early interest rate cut by the US Federal Reserve has also pressured yields. Additionally, the devastating earthquake that struck Ishikawa Prefecture on Jan 1 has damped expectations that the Bank of Japan (BoJ) will end the world’s last negative-interest rate in the near future. Swap markets price in about a 5% chance of a rate increase at its meeting in March compared with about 70% a month ago.
“It’s okay to buy them when yields rise as we are not in rush,” said Kenichiro Kitamura, general manager of investment planning and research department at the Japanese insurer with total assets of 46 trillion yen. “If the BoJ won’t do anything, it is also okay for us not to do anything as well,” he said in an interview on Monday.
Meiji Yasuda increased its holdings of yen debt in the first half of fiscal 2023 and indicated in last October’s investment plan that it plans to boost yen debt and non-hedged overseas bond holdings in the second half. However, Kitamura said it’s possible that may not happen.
“It does not matter if the purchase goes over to next fiscal year,” Kitamura said. “We only buy them when yields rise.”
The company bought foreign sovereign and corporate bonds when the US long-term yield was “high”, allowing Meiji Yasuda to put off more purchases for now, Kitamura said. — Bloomberg
