TOKYO Feb 28 Nippon Life Insurance Co
made its first overseas project finance loan worth
$100 million, the company's officials told Reuters, as the
Japanese insurer seeks riskier but higher-return investments
amid ultra-low interest rates at home.
Nippon Life bought the project finance loan, which was made
to an LNG project in the United States, from Bank of
Tokyo-Mitsubishi UFJ, officials of the insurer said.
The loan, whose maturity is over 10 years, has a return of
about 1.5 percent after deducting currency hedging costs, the
"The spread is bigger than those of domestic loans," said
Akira Shibata, chief manager at the finance planning and
Japanese insurers often make currency hedges so that swings
in foreign exchange rates would not negatively impact the
investments abroad when they are repatriated to yen.
The project finance loan is the latest attempt by the
Japan's largest private-sector life insurer to secure investment
returns as yields on Japanese government bonds (JGBs) have
fallen below levels that meet promises to insurance policy
Yields on 20-year JGBs, a tenor of choice by Japanese life
insurers, were well above 1 percent when Bank of Japan launched
massive monetary easing in April 2013. They fell to negative
territory at one point last year before rising back to 0.62
In January, Nippon Life President Yoshinobu Tsutsui had said
the company would start overseas project finance within the
coming month, as it accelerates the shift to non-traditional
The company is also looking for opportunities to make
overseas project finance loans in the primary market, said
Ryusuke Sakakibara, deputy general manager at its corporate
finance structuring office.
(Reporting by Taiga Uranaka; Editing by Amrutha Gayathri)