Japan’s life insurers may maintain or increase bond purchases — The Japan Times

Japan’s life insurance companies may maintain or increase purchases of domestic bonds in the second half of the fiscal year. This could potentially support future auctions of Japanese government bonds, The Japan Times reports.

Insurers’ plans

Japan Post Insurance intends to increase its purchases of yen-denominated bonds. Daido Life Insurance has revised upward its planned increase in the portfolio of domestic debt securities, mainly corporate bonds.

Meiji Yasuda Life Insurance plans to generally maintain the volume of its investments in government bonds while replacing lower-yielding securities with higher-yielding ones. A Japan Post Insurance representative said that the company will continue buying Japanese government bonds to replace securities reaching maturity and, following the rise in rates, is considering all maturities as potential investment targets.

More current news is available on the UA.News Telegram channel Telegram.

Demand for Japanese government debt

According to the Japan Securities Dealers Association, life insurers have been net buyers of ultra-long Japanese government bonds over the past four months. Societe Generale strategist Stephen Spratt believes insurers may increase demand for JGBs in the second half of the fiscal year, as domestic demand begins to recover and auction volumes for ultra-long securities decline.

Yields on ultra-long Japanese government bonds have recently approached their highest levels in several decades. This has increased the appeal of domestic debt for Japanese institutions after years of ultra-low rates that prompted investors to put money into foreign and riskier assets.

Signs of recovering demand emerged at Tuesday’s auction of 20-year JGBs: the bid-to-cover ratio was the highest on record. Japanese life insurers’ total invested assets stood at about ¥386 trillion, or $2.4 trillion, at the end of July, according to the Life Insurance Association of Japan.