The Yasuda Fire & Marine Insurance Co., one of Japan's largest insurers with over USD36 billion in assets, is considering increasing the size of its credit-linked note investment portfolio in the coming months from the JPY50 billion (USD376 million) it purchased before fiscal year-end last month. Takeshi Ushiki, deputy manager of the financial services department in Tokyo, noted that with credit-default swap spreads narrowing in Japan credit-linked notes look more attractive. He continued that management is currently discussing increasing the use of credit-linked notes as part of its strategy for the coming year but declined to elaborate on a targeted investment range.
Ushiki continued that the insurer typically purchases yen-denominated credit-linked notes, averaging around JPY500 million in size on Japanese corporates. Yasuda invests in notes rated single-A or higher. "Credit derivatives offer a higher yield than the underlying bonds," added Ushiki. Counterparties include Bank of Tokyo-Mitsubishi, Deutsche Bank, Goldman Sachs, and JPMorgan.
Jyunko Nagata, spokeswoman at BOTM in Tokyo, Seiko Adachi, spokeswoman at Deutsche Bank in Tokyo, and Orlando Camargo, spokesman at Goldman in Tokyo, did not return calls. Atsuko Yoshitsugu, spokeswoman at JPMorgan, declined comment.
