Japanese life insurers signal steady or higher domestic bond purchases in second half
In short
Japanese life insurers have signalled they will maintain or increase purchases of domestic bonds in the second half of the fiscal year, CLS reported on 21 October. Japan Post Insurance plans to buy more yen-denominated bonds, and Daido Life raised its plan to add domestic holdings, mainly corporate bonds.
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Japanese life insurers have signalled they will maintain or increase purchases of domestic bonds in the second half of the current fiscal year, which could support upcoming Japanese government bond auctions, CLS reported on 21 October. [ 1 , 2 ]
Japan Post Insurance said it plans to increase purchases of yen-denominated bonds. Daido Life Insurance Co. raised its plan to increase domestic bond holdings, mainly through corporate bonds. Meiji Yasuda Life plans to keep its Japanese government bond holdings roughly unchanged, while selling lower-yielding bonds and moving into higher-yielding securities. [ 1 , 2 ]
CLS said the plans further indicate that bond demand from insurers, one of the most important investor groups in Japan's bond market, is starting to recover. Citing Japan Securities Dealers Association data, it said insurers have been net buyers of super-long Japanese government bonds for the past four months. Strategists said the trend may give firmer demand support to the coming auctions. [ 1 ]
Caixin's summary of its market-update item said life insurers are especially important buyers of long-term government bonds because they use such bonds to match long-term liabilities. [ 3 ]
Why it matters
The reports say the plans could support upcoming Japanese government bond auctions. Caixin's summary notes that life insurers are especially important buyers of long-term government bonds because they use them to match long-term liabilities.
Key facts
- Japanese life insurers said they will maintain or increase domestic bond purchases in the second half of the fiscal year. [ 1 , 2 ]
- Japan Post Insurance said it plans to increase purchases of yen-denominated bonds. [ 1 , 2 ]
- Daido Life Insurance Co. raised its plan to increase domestic bond holdings, mainly through corporate bonds. [ 1 , 2 ]
- Meiji Yasuda Life plans to keep its Japanese government bond holdings roughly unchanged while selling lower-yielding bonds and shifting into higher-yielding securities. [ 1 , 2 ]
- According to Japan Securities Dealers Association data cited by CLS, insurers have been net buyers of super-long Japanese government bonds for the past four months. [ 1 ]
Confirmed by several sources
- Nothing is confirmed by two independent outlets yet.
Still unclear
- How large the planned purchases are The documents give no amounts or timing for any insurer's plans.
- Whether the insurers' demand will be enough to support the coming auctions The documents say only that the plans could provide support; strategists are quoted by CLS as saying the trend may give firmer demand, without figures.
- Japanese life insurers signalled they will maintain or increase domestic bond purchases in the second half of the fiscal year, which could support upcoming Japanese government bond auctions. Reported by a single source so far