Nippon Life eyes more JGB buying with yields near historic highs
TLT•JGB yields revive Nippon Life buying interest
A run-up in Japanese government bond yields to historic levels has increased the allure of the securities, said a senior executive at Nippon Life Insurance, a key buyer of the nation's long-term debt.
The 10-year JGB yield JP10YTN=JBTC crossed 3% this week for the first time since 1996, while the 30-year yield JP30YTN=JBTC jumped to 4.195%, the brink of a record high. The move has stoked speculation that Japanese investors may begin to redirect capital back home.
“With rates up this much, JGBs have become attractive,” said Daisuke Ishida, executive officer and general manager of the finance and planning department at Nippon Life. “We're getting closer to a good window to buy.”
Insurer remains focused on credit, but sees opportunities in long bonds
With roughly 83 trillion yen ($530 billion) in assets under management, Nippon Life is the biggest of Japan's life insurers, a group that has long served as a bedrock of demand for JGBs. The company prefers private credit investments at the moment but will look for opportunities to scoop up 30-year JGBs when yields settle, Ishida said.
Nippon Life's holdings of foreign sovereign bonds such as U.S. Treasuries and German Bunds topped out at 10 trillion yen ($64 billion) a decade ago, but now stand at just a few trillion yen as the company shifted into credit, Ishida said. He added that the firm has no plans to reduce its Treasury holdings any further from here.
Bond yields have been climbing worldwide as persistent inflation and central bank tightening weigh on markets. In Japan, that pressure has been compounded by investor concern over Prime Minister Sanae Takaichi's push for fiscal stimulus.
Ishida said Takaichi's fiscal plans did not present major concerns, saying he expects the government to maintain fiscal discipline and secure funding sources for its spending.
