Sumitomo Life wary of US govt bonds due to rising costs, low yields

Bangkok

SUMITOMO Life Insurance Co plans to add mainly corporate and mortgage debt in the United States, while avoiding government bonds in the country because of rising hedging costs and lower sovereign yields.

Japan's fourth-biggest life insurer with about US$210 billion in assets cut its forecast for 10-year Treasury yield, expecting it to trade between 1.2 per cent and 1.7 per cent over the next six months, according to Yoshimichi Takahashi, manager of the firm's foreign fixed-income investment section. The insurer in April estimated the benchmark yield to trade between 1.4 per cent and 2.6 per cent in the 12 months through March 2017. The debt yielded 1.4675 per cent on Thursday in Tokyo.