Asahi Mutual neutral on foreign bonds in 06-07

Tokyo, Apr 14: Asahi Mutual Life Insurance Co. said on Friday it is mostly neutral in its overall foreign debt holdings for the financial year from April 1, though it plans to buy foreign bonds that are not hedged against currency movements.

Japan's No.7 life insurer, which manages over 6 trillion yen (.56 billion) of assets on behalf of policy holders, said it will buy 50 billion yen of unhedged foreign bonds.

It plans to sell all of the 40 billion yen of hedged foreign bonds it holds at the moment, Yukio Takaike, general manager of asset management, told Reuters in an interview.

''Hedging costs have risen so high that we believe we cannot invest in hedged foreign bonds,'' Takaike said.

Rising interest rates in the United States and Europe have boosted hedging hedging costs for foreign bonds.

Asahi's foreign debt holdings total 420 billion yen -- 380 billion in unhedged bonds and the rest in hedged bonds -- having risen from 350 billion yen a year earlier.

Dollar bonds make up 85 percent of Asahi's unhedged foreign bond holdings, and the rest are euro bonds.

''We don't plan to change the ratio drastically,'' Takaike said.

Asahi forecasts a dollar/yen range of 105-125 yen and a euro/yen range of 130-150 yen this fiscal year.

The dollar traded around 118.65 yen on Friday while the euro fetched about 143.65 yen in Asian trade.

Asahi sees 10-year U.S. Treasury yields in a 4.5-5.5 percent range this financial year.

''Dollar bonds are good to buy if the dollar weakens to around 115 yen or lower while the 10-year Treasury yield stays around 5 percent,'' Takaike said.

Benchmark 10-year Treasuries were yielding 5.05 percent in late Thursday New York trade.

Takaike said Asahi plans to buy 300 billion yen of yen bonds this financial year, with the 10-year Japanese government bond a main investment target.

Despite a sharp rally in Tokyo share prices, Asahi plans no net change in the size of its Japanese stock portfolio this year, it said.

Reuters