Japan Post Insurance is holding off from buying most domestic super-long bonds, due to concern that the central bank’s reduction of debt purchases may weigh on the market.
Government bond yields have been climbing in recent weeks on expectations that the Bank of Japan will further cut monetary stimulus. The higher yields should be appealing for life insurers in Japan, who are major investors in super-long notes such as 30-year securities. But they’ve been slow to increase their holdings even after the BOJ raised interest rates in March for the first time since 2007.
"Yields on super-long-term bonds have risen to attractive levels,” said Hiroyuki Nomura, senior general manager of Japan Post’s investment planning department. But with Japan’s fiscal year recently starting on April 1, the insurer is watching market developments and only slowly increasing buying, he said.