Fewer Treasurys, more JGBs in the cards for Japan life insurers

NikkeiAsia/Toshihiro Sato and Kosuke Iguchi/5-10-2023

graphic representation of waves generated at sea headed for shore“Dai-ichi Life Insurance plans to cut its holdings of currency-hedged Treasurys, and Nippon Life Insurance also plans a more cautious approach to unhedged foreign debt. This comes amid a broad trend in Japan’s life insurance industry toward buying more JGBs, anticipating a change in policy by the BOJ.”

USAGOLD note: Japanese life insurance companies have been an important part of the demand picture over the past twenty years. The Council of Foreign relations puts the total holdings of foreign bonds by Japanese private investors (of which life insurers is one component at $740 billion) at $3 trillion. One investment manager stated the problem plainly. “After accounting for hedging costs, investing in Treasuries has no appeal in terms of yield.”

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