Japanese Funds Return to Overseas Bonds After Two Weeks of Sales

  • Purchases total net 844.7 billion yen in latest week, MOF says
  • Thirty-year yield declines to 0.265%, extending record low

Japanese investors returned to buying overseas bonds following two weeks of sales, seeking alternatives abroad to low yields at home. Government securities in the nation fluctuated, with the 30-year yield setting a record low.

Fund managers in the country bought a net 844.7 billion yen ($7.7 billion) of medium- and long-term bonds abroad in the week ended April 15, the Ministry of Finance reported Thursday. The move is a rebound after sales totaled 2.73 trillion yen in the prior two weeks.

“They’re hunting for yield,” said Hiroki Shimazu, senior market economist in Tokyo at SMBC Nikko Securities Inc., a unit of Japan’s second-largest lender. The Bank of Japan’s debt purchases, part of its effort to stave off deflation, are driving the payments on local bonds lower, he said.

The sales of overseas debt in the first two weeks of April coincided with the start of the nation’s fiscal year, driven by the preference among investors to start the period by showing a profit, Shimazu said.

Thirty-year yields set an all-time low of 0.265 percent as of 4:25 p.m. in Tokyo, according to Japan Bond Trading Co. Three-month yields fell to an unprecedented minus 1.037 percent.

Ten-year yields climbed 1 1/2 basis points to negative 0.12 percent.

A 20-year sale attracted demand for 3.55 times the amount of debt available. The average at the last 10 of the monthly before Thursday’s is 3.1.

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