Japan’s midsize life insurers are joining their larger peers in choosing to avoid the nation’s superlong government debt.
Expectations that yields will rise further, as the government boosts spending to stimulate the economy, have kept them away from bond buying.
"Bond yields rose too much and have now fallen, but the fundamentals haven’t changed,” said Hiroe Oizumi, general manager for fixed income at Fukoku’s securities investment department.
"It’s unlikely that yields will return to their peaks in the short term, but in the medium term, there’s a possibility that they’ll break above that level."
Oizumi added that he has refrained from purchasing 30-year and 40-year bonds since the second half of the fiscal year started in October due to risks of holding them for long periods, and has switched to JGBs with remaining maturities of 10 to 15 years.
