Norway’s Norges Bank Investment Management, which manages one of the world’s largest sovereign wealth funds, plans to increase its holdings of Japanese government bonds as part of its portfolio diversification strategy, it was learned.
The move may help curb rises in Japanese long-term interest rates and the depreciation of the yen. The yield on the most recent issue of 10-year JGBs is regarded as the Asian nation’s benchmark long-term interest rate.
NBIM takes charge of investment management for revenues from Norway’s oil and natural gas production. In a letter sent to the finance ministry of the oil-rich Scandinavian country dated Tuesday, NBIM proposed increasing the proportion of JGBs in its bond portfolio from 4.6 pct to 7.4 pct.
The hike amounts to a roughly 17-billion-dollar increase in JGBs held under the sovereign wealth fund, according to an estimate by a U.S. media outlet.
Meanwhile, NBIM plans to cut the shares of U.S. and eurozone sovereign bonds, and reduce the proportion of government bonds in its overall bond investments from 70 pct to 50 pct. Its U.S. Treasury bond holdings are expected to decrease about 80 billion dollars, possibly putting upward pressure on U.S. long-term interest rates.
