The troubles at Silicon Valley Bank and its subsequent collapse have driven investor attention to the heavy investment in U.S. bonds by Japan’s lenders, casting a pall over their shares.
SVB’s woes have been rooted in tens of billions of dollars it plowed into longer-term bonds, confident that rates would stay steady. Japanese banks have also stepped up investment in foreign debt over the past decade as outgoing Bank of Japan Gov. Haruhiko Kuroda’s aggressive monetary easing crushed domestic yields.
While there aren’t any alarm bells ringing over the health of Japan’s banking sector — with the size of foreign-debt investment significantly smaller than that for domestic securities — investors are nonetheless worried over potential losses.