* Plans to boost foreign bonds without FX hedging by about
* To increase foreign corporate bonds by around Y50 bln
* Sees dollar to strengthen vs yen on solid U.S.
* Expects market to be less volatile than last year
(Updates with graphic, bullet points and additional RICs)
By Hideyuki Sano and Yoshiko Mori
TOKYO, April 13 Sompo Japan Nipponkoa Insurance
plans to cut currency hedging on its U.S. Treasuries
holdings in the fiscal year to March 2018, with the dollar
expected to strengthen gradually, the company's investment
planning executives said on Thursday.
The institutional investor also plans to step up investment
in U.S. corporate bonds and other credit products to enhance
yields while keeping investments in low-yielding domestic bond
in check, they said.
"When you look at economic fundamentals there's no denying
that the U.S. economy is firm. And that suggests the dollar's
fair value should be above its current levels," said Hidetoshi
Kurachi, manager of investment planning.
Japanese investors have stepped up buying in foreign bonds
in recent years as alternative to low-yielding domestic bonds,
helping to curb their yields. Last financial year, Japanese
insurers bought a record 7.76 trillion yen ($71.3 billion) of
The insurer, the core firm of Sompo Holdings group,
expects the dollar to rise to 116 to 120 yen at the end of the
current financial year next March, compared to below 109 yen
"Last financial year, we were expecting high market
volatility and we were positioned to deal with that. But this
year, we expect less choppy markets," Kurachi said.
Although the U.S. administration could veer towards more
protectionist measures, which could trigger retaliation from
trade partners thereby crimping world trade, it does not think
that risk is big at the moment, he said.
Against that backdrop, the company plans to boost risk
exposures by reducing currency hedging on foreign bonds and
buying more corporate bonds.
Japanese investors typically make currency hedging on a
large part of their foreign bond investment, paying a hefty
The investor plans to shift around 50 billion yen of funds
from currency-hedged foreign bonds to unhedged ones in the
current financial year, Kurachi said.
Sompo Japan also plans to add around 50 billion yen to its
portfolio of corporate bonds, he added.
The firm has no plans to increase domestic bonds, whose
yields remain low due to the Bank of Japan's quantitative easing
and negative interest rates, Kurachi also said.
Sompo Japan is looking to cut its holding of Japanese stocks
by around 100 billion yen as a part of its medium-term plan to
reduce shares it has held for cross-holding and other business
($1 = 108.88 yen)
(Reporting by Hideyuki Sano; Editing by Chang-Ran Kim and Sam