Japan insurers expand foreign bond portfolio in search for yield
By Taiga Uranaka
TOKYO, June 16 (Reuters) - Japanese life insurers are investing in the sovereign bonds of emerging countries such as Poland and Mexico, as ultra-low interest rates in Japan and other developed markets hurt yields.
The top four insurers - with a combined securities portfolio worth $1 trillion - have invested the bulk of their funds in Japanese government bonds (JGBs) and major sovereigns, but massive monetary easing in Japan and the euro zone have forced them to break with their traditionally conservative stance.
Portfolio managers tell Reuters they have started shifting or are planning to diversify the currency make-up of their investment assets.
"We are planning to start bond investments in new countries. We want to spend up to 30 percent of 500 billion yen ($4.1 billion) earmarked for foreign bonds," Iwao Matsumoto, general manager at investment planning department at Sumitomo Life Insurance Co, told Reuters, as part of a series of interviews with Japan's life insurers about their debt portfolios.
The insurer's foreign securities portfolio has mostly comprised U.S. Treasuries and bonds from Australia and major euro zone countries.
Matsumoto said it was now looking beyond the usual staple of U.S., Australian and major euro zone bonds at other sovereigns, with credit ratings of triple B or higher, but did not specify.
The Bank of Japan's expanded stimulus in October was the catalyst for the shift.
"Around the same time, there were expectations of massive easing by the European Central Bank (ECB). We thought we needed to take action," Matsumoto said. Continuación...