April 24, 2018 / 8:50 AM / a year ago

UPDATE 1-Japan's Meiji Yasuda Life to raise foreign bond holdings, focus on corp debt

* To focus on foreign corporate bonds this FY

* Mainstay foreign assets dollar denominated (Adds details, quotes)

By Shinichi Saoshiro and Yoshiyuki Osada

TOKYO, April 24 (Reuters) - Japan’s Meiji Yasuda Life Insurance Co said on Tuesday it plans to increase holdings of both currency-hedged and unhedged foreign bonds in the fiscal year ending March 2019, as the insurer retains its emphasis on assets that offer better returns than domestic instruments.

The country’s third-largest private life insurer, with assets of around 37.7 trillion yen ($347 billion), said its foreign bond holdings increased by 690 billion yen to 6.61 trillion yen in the previous fiscal year ended March 2018.

Out of the 690 billion yen, 800 billion was unhedged while 610 billion was currency-hedged, the insurer added.

“Dollar-denominated debt make up a large part of our foreign bond holdings. They are relatively attractive assets as we believe U.S. yields are headed higher,” Toshihiko Yamashita, chief executive of Meiji Yasuda Life’s investment division, said at a news conference.

“We started purchasing foreign corporate bonds in June last year. We believe this area has the biggest room for expansion in terms of investment.”

With yen bond yields stuck at historically low levels under the Bank of Japan’s extensive monetary easing, since last fiscal year Meiji Yasuda has actively sought yields in ‘credit products’ such as domestic and foreign corporate bonds and asset-backed securities.

“Yen bonds remain our mainstay assets, but their yields are too low,” Yamashita said.

The insurer said its yen bond holdings decreased by 140 billion yen the previous fiscal year to 16.96 trillion yen or 45 percent of its total assets.

It plans to slightly increase its yen holdings this fiscal year.

Yamashita said geopolitical risks will need to be watched constantly this fiscal year as a potentially market-moving factor.

The insurer expects dollar/yen, currently at around 108.80 yen, to move between 100-118 yen this fiscal year.

“The timing would be favourable for us to buy unhedged foreign bonds if dollar/yen moves towards the lower end of our projected 100-118 yen range,” Yamashita said.

$1 = 108.7600 yen Reporting by Shinichi Saoshiro; Editing by Chris Gallagher and Vyas Mohan

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