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INTERVIEW-Tokio Marine to keep JGB holdings steady, eyes U.S. yields
October 20, 2014 / 8:27 AM / in 3 years

INTERVIEW-Tokio Marine to keep JGB holdings steady, eyes U.S. yields

* Will consider buying if 10-yr U.S. yield rises toward 3 pct

* Proceeding with plan to cut stock holdings by Y100 bln this FY

By Lisa Twaronite and Noriyuki Hirata

TOKYO, Oct 20 (Reuters) - Tokio Marine & Nichido Fire Insurance expects to keep its Japanese bond holdings largely unchanged this fiscal year ending in March 2015, and might consider buying U.S. Treasuries depending on market conditions, the firm’s investment planning official said on Monday.

Tokio Marine & Nichido Fire is the core arm of Tokio Marine Holdings, one of Japan’s big three non-life insurer groups.

Financial markets closely watch Japanese insurance companies because of the huge amounts of assets they manage, for clues to broader investment trends and market direction.

Yoshiaki Nakahara, deputy general manager of portfolio investment group at Tokio Marine & Nichido Fire, said that rising hedging costs and falling interest rates in the U.S. and Europe were a disincentive to investment in the first half of the fiscal year.

If the benchmark U.S. Treasury yield were to rise back toward the 3.0 percent level, the company might consider purchasing them, though this might not happen until the fourth quarter of this fiscal year, Nakahara said.

The 10-year Treasury yield fell below 2 percent last week, skidding to 17-month lows amid widespread fears about global growth. It stood at 2.212 percent on Monday in Asian trading.

The insurer sees the benchmark 10-year Japanese government bond yield trading in a range of 0.350 percent to 0.950 percent for the rest of the fiscal year.

The 10-year JGB yield dropped to a 1-1/2-year low of 0.465 percent last Friday and has wallowed at relatively low levels as the Bank of Japan’s massive bond-buying programme pulls liquidity from the domestic bond market. It stood at 0.490 percent on Monday.

Nakahara added that the company has no plans to adjust the duration of its bond portfolio, which is now around 6-7 years.

Tokio Marine’s strategic plans to cut its domestic stock holdings by around 100 billion yen (US$934.7 million) this fiscal year to reduce its exposure to stock market volatility was proceeding as planned, Nakahara said. (1 US dollar = 106.9900 Japanese yen) (Reporting by Lisa Twaronite; Editing by Kim Coghill)

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