INTERVIEW-Asahi Life plans to reduce foreign bond holdings in Oct-March
TOKYO, Oct 10 (Reuters) - Japan's Asahi Life Insurance plans to reduce its foreign bond holdings from October to March, after having raised them by 160 billion yen ($1.65 billion) during the previous six months, mostly in euro-denominated bonds, a senior official said.
Asahi Life also plans to maintain full currency hedging on its foreign bonds, after having returned to fully hedging its purchases of foreign bonds in the first half of the fiscal year from a hedge ratio of 90 percent in March.
In April, the company had said it would consider further lowering the ratio if it believed the Japanese yen would continue its weakening trend.
"We are ready for foreign bond investment without currency hedging if the dollar's uptrend becomes clearer," Takahiro Ono, Asahi's chief portfolio manager, told Reuters in an interview.
But Asahi raised currency hedging because the dollar did not gain much against the yen despite a rise in U.S. bond yields in April-September, he added.
In that period, the company increased its foreign bond holdings by 160 billion yen to 360 billion yen.
The insurer maintains its plans to increase its Japanese bond holdings in the rest of the current financial year.
In the first half of the financial year from April, it had increased yen bonds by about 100 billion yen, or about two-third of its annual plan to increase yen bonds by 150 billion yen.
It kept the duration of its JGB portfolio steady, at slightly more than 11 years to maturity.
Asahi Life expects the 10-year JGB yield to trade in a range of 0.5 percent to 0.9 percent and finish the fiscal year at 0.7 percent. It stood at 0.655 percent on Thursday.
The Bank of Japan is now buying the equivalent of 70 percent of JGB issuance every month, as part of its massive monetary easing scheme unveiled in April, in a bid to achieve 2 percent inflation.
The central bank's easing operations have pushed down yields along the curve, and at first sent the yen tumbling against its major counterparts.
The insurer expects the 10-year U.S. Treasury yield to fluctuate between 2.5 percent and 3.2 percent and end the year at 3.0 percent.
The dollar is seen trading in a range of 90 to 100 yen , and finishing the year at 100 yen, while it expects the euro to move between 120 yen and 140 yen and end the fiscal year at 135 yen.
The insurer expects the Nikkei stock average to trade between 12,000 and 16,000, and stand at 15,000 as of the end of March 2014.
($1 = 97.1950 Japanese yen)
(Editing by Jacqueline Wong)