TOKYO: Fukoku Mutual Insurance Co has slashed its buying of Japanese government bonds because market liquidity has dried up amid the Bank of Japan's massive bond-buying programme, the president of the midsize life insurer said on Thursday.
Instead of JGBs, Fukoku is likely to continue buying foreign bonds with hedges against currency swings in the fiscal year starting in April as it seeks assets that offer higher yields than domestic debt, Yoshiteru Yoneyama told Reuters in an interview.
"The most liquid assets in our home market are losing liquidity. It makes asset management very difficult and that's frightening," Yoneyama said.
Japan's life insurers have been struggling to find assets to invest in as yields on JGBs fell to historical lows after the BOJ in October eased monetary policy further. The central bank expanded its annual JGB purchases to 80 trillion yen ($673 billion) from 50 trillion yen.
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