TOKYO/SYDNEY, April 24 (Reuters) - Japan Post Insurance Co plans to raise holdings of foreign bonds, primarily U.S. corporate debt, in the financial year to March 31, 2021, a senior executive said on Friday.
“When you consider dollar hedging costs, only credit products have a decent return,” Takayuki Haruna, the head of the company’s investment planning department, said in a telephone briefing with reporters.
“But as you can see from oil prices, some sectors are likely to see a rise in yield spreads. So we will be selective in companies and sectors. At the moment, we are cautious on high-yield debt.”
Haruna said the company would expand holdings of foreign bonds without currency hedges over fiscal 2020/21 if the price was right.
“Our forecast for the dollar/yen this financial year is 100 to 112 yen. So if the dollar falls below 100, we would consider buying foreign bonds without currency hedge,” said Haruna.
The greenback was trading at 107.65 yen on Friday.
Japan Post Insurance, the insurance arm of formerly state-owned conglomerate Japan Post group, also plans to increase holdings of domestic stocks, Haruna said.
Meanwhile, its holdings of yen assets are likely to decrease in the fiscal 2020/21 because of the large redemption of current bonds.
Japan Post Insurance, popularly known as Kampo, expects the global economy to stagnate due to the novel coronavirus pandemic and plans to take market risk cautiously, not betting on a single scenario.
“If the infections subside fairly quickly, we could see a big reversal in risk asset prices given the scale of stimulus. On the other hand, the pandemic could change a lot of things,” said Haruna. “For now, we want to be ready to deal with various scenarios.” (Reporting By Hideyuki Sano and Tomo Uetake; editing by Jane Wardell)