The search for Silicon Valley Bank-style portfolios

Japanese investment firms are similarly reliant on long-term bonds, leaving them exposed to duration risk and facing potential losses. Rising interest rates are causing bond issuers around the world to pay more to borrow, and the disappearance of previously reliable buyers only adds to the pain.

March 18, 2023 . 9:08 AM

1 min read

Japanese investment firms have large holdings of domestic and foreign long-maturity bonds, which have already slumped in value due to duration risk.
Norinchukin Bank, a Japanese investment firm, is one holder of such bonds, and the value of its bond portfolio has fallen from ¥36trn ($293bn) in March 2022 to ¥28trn in December 2022.
Japan Post Bank, a savings bank, now holds 35% of foreign securities in its total holdings, and the Japanese government owns almost a third of the bank.
Japanese investors sold $165bn more in foreign long-term bonds than they bought last year, the largest disposal on record.
Rising rates have left bond issuers across huge swathes of the world paying more to borrow, and the disappearance of previously reliable buyers only adds to the pain.