The U.S. mortgage backed securities (MBS) market,specifically Ginnie Mae bonds, could be one of the key beneficiaries of the surprise move by the Bank of Japan (BOJ) last week to embark on an aggressive monetary policy program, according to analysts at Deutsche Bank.
The bank said institutional investors seeking alternatives would move away from Japanese government bonds (JGB) into equities, cash, U.S. Treasurys and other higher-yielding bonds.
(Read More: Japan Sold Most Foreign Bonds in a Year Last Week)
The bank said Ginnie Mae bonds "should see the most flow"because they are backed by the full faith and credit of the U.S.
The Deutsche Bank team led by David Folkerts-Landau, global head of research, said Japanese investors would favor Ginnie Mae bonds over those of mortgage finance agencies Fannie Mae and Freddie Mac because investors had lost confidence in them after those companies went into conservatorship in 2008.
(Read more: Bank of Japan Unveils Aggressive Monetary Policy )
For investors looking to benefit from this shift, Deutsche bank recommends buying 30-year Ginnie Mae bonds, which yield 3.5 percent.
The move to diversify into foreign bonds would also break a five-year cycle of Japanese institutional capital being hoarded in domestic debt, the analysts noted.
"Since 2007 roughly 75 percent of securities portfolios of institutions have been in domestic debt," the report said.
Under the BOJ's program, the central bank would buy 7 trillion yen in long term JGBs a month in an attempt to achieve its 2 percent inflation target.
By CNBC's Shai Ahmed, Follow Her on Twitter @shaicnbc