SYDNEY, April 24 (Reuters) - Japan’s Sumitomo Life Insurance Co plans to increase allocation to foreign corporate bonds by about 800 billion yen ($7.5 billion) in the current fiscal year ending March, a senior investment planning official said on Friday.
“As a long-term investor who cares about asset liability management, we will accelerate investment in foreign, investment-grade credit products that offer relatively decent yields,” said Toshio Fujimura, general manager of the investment planning department.
He said the company planned to raise exposure in dollar-denominated corporate bonds primarily and that the intended increase would include investments through third-party mutual funds.
The country’s fourth-largest private life insurer also plans to raise its holdings of dollar bonds without currency hedging during this fiscal year when an opportunity arises — namely, when the dollar weakens against the yen.
“We cannot say at which level we will buy the dollar because that decision also depends on interest rates. But if the dollar falls below the midpoint of our forecast range, we will definitely start considering making a move,” Fujimura told Reuters in emailed comments.
The company expects the dollar/yen will move in a range of 100-115 yen for the fiscal 2020/21, which makes the midpoint of its forecast at 107.50 yen. The greenback was trading at 107.65 yen on Friday.
On the flip side, Sumitomo Life said Japanese government bonds (JGBs) were not attractive at current yield levels, although the company planned to continue buying super-long JGBs with an aim to have matching assets for its yen liabilities.
“To us, JGBs are not attractive unless the 30-year yield tops 1%,” said Fujimura.
The 30-year JGB yield was last quoted at 0.42% .
Elsewhere, Sumitomo Life plans to buy domestic and international stocks on the dip, for example, if the novel coronavirus-induced market crash happens again.
Sumitomo Life’s total assets stood at 33.8 trillion yen, as of end-December. ($1 = 107.6500 yen) (Reporting By Tomo Uetake; Editing by Subhranshu Sahu)