Japan's Taiyo Life Insurance may further reduce its holdings of euro-denominated bonds in the October-March period as it expects uncertainty over Europe's debt crisis to continue, the firm's top portfolio manager said on Thursday.
Taiyo Life, Japan's sixth-largest life insurer with assets of 5.9 trillion yen ($77 billion), may cut its euro-denominated holdings by as much as 50 billion yen ($658 million), or by 25 percent, during the second half of the current financial year to March.
Taiyo slashed such euro holdings by 40 billion yen, or 17 percent, to 200 billion yen in April-September. "We'll look for an appropriate time to sell euro-denominated assets further from current levels," Takeshi Negama, general manager of the company's investment planning section, told Reuters in an interview.
"We expect the debt situation in Europe to remain unstable. We still need to watch developments there." Euro zone leaders on Thursday agreed to boost the region's rescue fund firepower and reached a deal on a 50 percent writedown for private bondholders of debt.
The European Financial Stability Facility (EFSF) will be leveraged four or five times to around 1 trillion euros ($1.4 trillion), while the private sector agreed to a 50 percent cut in its bond investments to reduce Greece's debt burdens.
Negama said, however, it is too premature to say that volatility in financial markets will stabilise in the near term, forcing Taiyo Life to maintain a conservative stance in overall investments.