Reuters: US Dollar Report: UPDATE 1-Nippon Life cautious but eyes chances for foreign bond buying

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UPDATE 1-Nippon Life cautious but eyes chances for foreign bond buying Apr 22nd 2013, 10:02 Mon Apr 22, 2013 6:02am EDT * Sees dollar at 93-103 yen, euro at 117-137 this fiscal year * Sees 10-year JGB yielding between 0.3 to 0.9 pct this fiscal year * Keeps cautious eye on current market levels after yen fell rapidly By Chikako Mogi TOKYO, April 22 (Reuters) - Nippon Life Insurance Co , Japan's biggest life insurer, said on Monday it plans to slow its increase in domestic bond investment in the current fiscal year to March 2014, but plans to raise unhedged foreign bond holdings at an appropriate time this fiscal year. The life insurer, with total assets of about 50 trillion yen ($504 billion), plans to allocate about 70 percent of its 1 trillion yen earmarked for investment in the fiscal year to yen assets which includes yen loans, domestic bonds and hedged foreign bonds, a senior official said. After an aggressive monetary easing by the Bank of Japan earlier this month, volatility in the Japanese government bond market has heightened and the life insurer may slow an increase in such investment if yields stayed low. "We are currently taking a wait-and-see stance on interest rates as volatility has risen after the BOJ's bold monetary policy, and if interest rates hover at low rates, we may consider shifting to corporate bonds for credit spreads or hedged foreign bonds as options," Hiroshi Ozeki, general manager in the finance and investment planning department, told reporters. The BOJ stunned global financial markets by committing to open-ended asset buying to nearly double the monetary base to 270 trillion yen by the end of 2014, looking to end two decades of stagnation and lift inflation to 2 percent. If Nippon Life were to buy more hedged foreign bonds, they would eye bonds of developed countries with liquidity, he said. Nippon Life expects the yield on 10-year JGBs to move in a 0.3-0.9 percent range until next March. Nippon Life said it has slashed its exposure to unhedged foreign bond holdings last fiscal year, but has kept investment in foreign stocks so it has not just simply reduced its exposure to foreign investments, Ozeki said. With Japanese interest rates staying low, Nippon Life would consider buying more foreign bonds without hedges when there are chances for bargains. "It there is an appropriate timing, we could like to boost allocations to unhedged foreign bonds," he said. But the life insurer was cautious about the current Japanese stock market and the yen levels after the Japanese currency had fallen at a rapid pace over the past several months. "We are seeing current levels with caution and eye bargain-hunting opportunities," Ozeki said. Nippon Life said it expected the dollar to trade between 93 to 103 yen this fiscal year and the euro to trade between 117 to 137 yen. Link this Share this Digg this Email Reprints

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