UPDATE 1-Nippon life to boost domestic bonds, seeks chance to buy foreign bonds
* To increase yen bond holdings, but may limit if yields too low
* Ready to buy foreign bonds without FX hedging if rates favourable
* Nippon Life sees dollar/yen moving in Y93-103 in Oct-March
* Yen bond portfolio up Y620 bln, foreign bonds up Y190 bln in Apr-Sept
TOKYO, Oct 22 (Reuters) - Japan's Nippon Life Insurance plans to increase yen bond holdings in the six months to March but is also ready to buy foreign bonds as well if it can buy dollars and euros on dips, a company official said on Tuesday.
Although the Bank of Japan's radical monetary easing in April sparked speculation many Japanese life insurers might stampede into foreign bonds to earn higher income, Nippon Life's stance is a reflection of little change in industry investment patterns.
In the six months ended in September, Japan's largest private life insurer with total assets of about 55 trillion yen ($560 billion), increased its domestic bond holdings by 420 billion yen to 24.54 trillion yen.
It increased foreign bonds by 190 billion yen to 8.53 trillion yen. But the currency hedge ratio, closely tracked by traders for its impact on currency markets, fell only a little to 72.2 percent in September from 74.9 percent in March.
"We think the yen will be boxed in a range although Japan's current policy is likely to weaken the yen on the whole. If there are good opportunities, we want to increase foreign bonds without currency hedging," said Hiroshi Ozeki, general manager of finance and investment planning at Nippon Life.
"We want to buy (foreign currencies) at a favourable rate. If there are no dips, we will rather hedge our foreign bond investments," Ozeki told a news conference.
Ozeki steered clear of saying exactly what levels he sees as attractive. But he said the company sees the dollar trading between 93 and 103 yen.
The dollar hit a 4-1/2-year high of 103.74 yen in May on hopes of aggressive policy easing by the Bank of Japan but it has been stuck in a range around 95-100 yen since then.
Ozeki said Nippon Life would continue to pour a big part of its new money into domestic bonds in the current half year to March.
But he also said the insurer may limit buying in yen bonds if their yields fall too low.
The 10-year Japanese government bond yield fell to a five-month low of 0.615 percent last week.
"At current yield levels, we won't be aggressively buying Japanese bonds although I wouldn't say we won't buy at all," he said.
On the other hand, the insurer has a more favourable view of demand for U.S. bonds than before as it expects U.S. growth to be damaged by political wrangling over debt and spending that led to the recent government shutdown.
"The political stalemate will not change at least until mid-term elections next year. So rather than holding off buying Treasuries, we think we should stay in the U.S. market and earn income," Ozeki said.