Japan's seniors a boost for Asian bonds

[SINGAPORE] Asian bonds are reaping the benefits of Japan's ageing population like never before.

Record amounts of Japanese cash are flowing into the region's fixed-income markets as the demands of the world's oldest population force the nation's pension funds to load up on higher-yielding assets overseas.

Japan's US$1.3 trillion Government Pension Investment Fund, the largest globally, said it's cutting holdings of local bonds that offer the world's lowest yields and seeking better returns abroad to meet mounting payouts. Nomura Holdings Inc estimates such funds will pump about US$200 billion into overseas bonds and stocks, purchases that will shield Asian assets against capital outflows as the US Federal Reserve dials back stimulus.