May 31, 2018 / 7:58 AM / a year ago

RPT-Japan Post Insurance ready to buy short-term Italian debt:CIO

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* Kampo looking to buy short-term Italian bonds after selloff-CIO

* Volatility spike in market creates buying opportunity-CIO

* Firm had cut Italian debt holdings by 2/3 before March elections

By Tomo Uetake and Hideyuki Sano

TOKYO, May 31 (Reuters) - Japan Post Insurance Co, one of the largest Japanese institutional investors, is looking to buy short-term Italian government bonds after the recent sell-off made them inexpensive, the firm’s chief investment officer said.

The firm, also known as Kampo, holds 76.8 trillion yen ($707 billion) of assets and currently has limited exposure to Italian debt after having reduced its holdings by two-thirds before the country’s election on March 4, Atsushi Tachibana told Reuters.

“We are looking to buy short-term Italian bonds now,” Tachibana said, adding that he expects volatility to remain high and present good buying opportunities when the market overreacts.

Kampo’s current Italian debt exposure amounts to 1 percent of its total foreign debt holdings. That would suggest about 70 billion yen ($644.45 million) based on its latest disclosure, which puts its holdings of foreign bonds at 7 trillion yen.

“We thought Italian political risks were underestimated when the two-year Italian yield was so close to the German yields ahead of the election,” Tachibana said.

The two-year Italian debt yield was around minus 0.10-0.20 percent, compared to minus 0.60 percent, just before the inconclusive election.

It spiked to almost three percent on Tuesday, making the biggest one-day rise since 1992, after the two anti-establishment parties clashed with the country’s president who rejected their choice of an eurosceptic economist as finance minister. ($1 = 108.6200 yen) (Reporting by Tomo Uetake and Hideyuki Sano Editing by Shri Navaratnam)

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