Asahi Mutual to invest in overseas infrastructure for first time

TOKYO (Reuters) - Japan's Asahi Mutual Life Insurance plans to start investing in overseas infrastructure for the first time through its newly established funds, a senior executive told Reuters in an interview on Wednesday.

Japan's life insurers have been shifting away from Japanese government bonds, which had been the mainstay of their portfolios, because of the recent decline in bond yields under the Bank of Japan's extensive monetary easing.

Infrastructure funds target 'greenfield' or 'brownfield' projects during their primary stage of investment. While 'greenfield' projects are associated with assets yet to be constructed and carry higher investment risks, 'brownfield' projects have more stable cashflows and involve established assets in need of improvement.

Asahi will invest in the latter, said Masaru Tsuruoka, head of the asset allocation and planning department.

"We will mostly focus on infrastructure projects such as water projects and airport works in developed countries. We can expect 4-5 percent yields through those projects," he said.

Asahi will invest in open-ended funds, which are liquid and allow investors to redeem their investment at any time, he added.

Tsuruoka said the insurer is also considering to invest in such foreign assets as corporate debt and sovereign debt through its asset management arm. Asahi has allocated about 15 billion yen (117,887,101.63 pounds) to spend on this category and on infrastructure investment, he said.

Asahi also plans to increase its foreign government bond holdings by another 10 billion yen in the second half, after investing 100 billion yen in the April-Sept period, Tsuruoka said.

During the first half, most of Asahi's investment in foreign government bonds was currency-hedged. But it will consider investing in foreign debt without currency-hedging in the second half as the risk of a strong yen is seen receding, he said.

Tsuruoka said Asahi's domestic bond investment was expected to fall by 40 billion yen in the second half, while its loan investment would likely drop by 30 billion yen.

The BOJ surprised markets by introducing measures to control the yield curve in its policy meeting last month and said it would aim to keep the 10-year government bond yields at about zero percent.

But the 10-year Japanese government bond yield has been in the negative territory, and stood at minus 0.065 percent on Wednesday.

"Super long bonds' yields have risen, so the monetary action gave a somewhat positive effect. But yields are overall low, so we will not invest in JGBs," Tsuruoka said.

(Reporting by Hirotoshi Sugiyama; Writing by Ayai Tomisawa, editing by Chris Gallagher and Sherry Jacob-Phillips)