TOKYO, March 20 (IFR) - Two major Japanese life insurers,
Meiji Yasuda Life and Nippon Life, have unveiled plans to
diversify their credit investments, with a special focus on
socially responsible debt, in a move that bankers say could
expand global appetite for yen products.
Meiji Yasuda announced late last week it will increase
purchases of foreign and sustainability credit products to
diversify and enhance its investments and lending activities.
Under a three-year programme dubbed MY Innovation 2020, the
insurer aims to almost quadruple investments and lending in
foreign credit products to 800 billion yen ($7.1 billion) from
200 billion-plus, while curtailing investment and lending in
domestic credit products to 800 billion from the current 1
Meiji Yasuda will also replace its current 400 billion yen
growth-sector investment target, introduced during the 2013
fiscal year, with an expanded 500 billion target for
sustainability investments and loans.
Nippon Life is taking a similar track, with some tweaks to
its current three-year 2015-2017 programme and drawing up a new
programme to contribute to sustainable growth.
In the new plan, Nippon Life said it will invest 200 billion
yen in bonds following environmental, social and governance
(ESG) principles in fiscal years 2017 to 2020.
Bankers welcomed the life insurers' moves, which they
believe will be a boon for the international yen market in the
next fiscal year starting on Apr. 1.
"Currency basis swaps, such as the USD/JPY basis, have
recently bounced off deep lows, which will make it easier for
borrowers to issue bonds next fiscal year than this fiscal
year," said a banker. "And such a move by investors to expand
room to buy foreign credit products will be a tailwind."
Bankers said the increased sums earmarked for sustainability
investments would help bring in more investors to the growing
ESG market. This month, Starbucks sold yen-denominated
Global corporate sustainability bonds, while Electricite de
France sold a Green Samurai earlier this year.
Nippon Life last year invested 4.5 billion yen in women's
bonds issued by Banco del Estado de Chile through a private
placement, and 3 billion yen in ICICI's Tokyo
Pro-bonds, which funded contributions to projects with social
and economic benefits for women, while Dai-ichi Life bought 2.3
billion yen of Japan International Cooperation Agency's debut
issue of Social bonds last year.
"The investor base for ESG-themed bonds in the Japanese
market is currently led by the lifers. However, we think the
investor base will expand going forward," said Ryutaro
Hiroshima, head of international debt syndicate at Mitsubishi
UFJ Morgan Stanley Securities.
"Not just lifers but investors overall are taking proactive
steps to set aside money to support the green product market,"
said another banker. He said there were even some corporate
investors dedicated to Green bond investments and trying to be
good corporate citizens.
Bankers hope that greater interest in foreign credit and
sustainability products will help grow the yen market.
"We believe, by enhancing the product line-up such as
sustainability bonds, broadening the investor base one step
further will drive the expansion of the international yen market
including Samurai bonds," Mitsubishi's Hiroshima said.
(Reporting by Takahiro Okamoto; Editing by Vincent Baby)