Meiji Yasuda Life ready to buy Treasuries at yield of 3%, if dollar slips

By Tomo Uetake

TOKYO (Reuters) – Meiji Yasuda Life Insurance coverage Co is able to purchase U.S. Treasuries at a yield of three% with out forex hedging, if the greenback falls under 135 yen, a senior firm official stated on Wednesday.

In an interview with Reuters, Yoshimasa Osaki, head of funding planning at one in every of Japan’s Large 4 non-public life insurers, stated foreign-currency bonds with a yield of three% or extra look enticing when Japanese authorities bond (JGB) yields are so low.

“Even for U.S. Treasuries, 3% is kind of a lucky yield which you do not come throughout fairly often in the long term. So if the greenback slips under 135 yen, will probably be a great likelihood to purchase with no hedge,” stated Osaki.

Osaki stated the agency thinks each Treasury yields and the greenback have already hit their peaks.

The ten-year U.S. Treasury yield rose to an 11-year excessive of three.498% on June 14 and was final quoted at 2.78%, whereas the greenback/yen jumped to its 24-year excessive of 139.38 on July 14 earlier than easing to round 136 yen.

“A weak yen itself just isn’t a foul factor for us because it boosts the worth of our international currency-denominated property. However this time, we suffered losses from surging bond yields. All in all, the detrimental influence from larger yields barely outweighed the advantage of a softer yen.”

Osaki stated Meiji Yasuda just isn’t in a rush to purchase JGBs although it expects their yields to edge larger in direction of March, the top of this fiscal yr, and April, when the Financial institution of Japan Governor Haruhiko Kuroda’s time period expires.

“The 30-year JGBs yielding 1.3% just isn’t excessive sufficient. If the yields rise to 1.5%, we could purchase extra aggressively.”

Forex hedged international bond investments had been widespread amongst Japanese traders for years, however rising prices of greenback hedging as a result of larger U.S. rates of interest are making that technique more and more unattractive.

“For now, we choose to purchase Italian and Spanish authorities bonds. The yields are enticing even on a currency-hedged foundation. And we do not anticipate the hedging value will rise a lot,” Osaki stated.

Meiji Yasuda Life’s whole property stood at 43.5 trillion yen ($320 billion) as of March 31.

(Reporting by Tomo Uetake; Enhancing by Kim Coghill)