Japan¡¯s Government Pension Investment Fund is emerging as an important source of demand for the nation¡¯s debt just as the central bank plans to reduce bond purchases.
The GPIF¡¯s holdings of government bonds increased 25% to ?50.3 trillion ($311 billion) in the fiscal year ended March 31, according to Bloomberg analysis of data from the fund released last week. This happened just as the proportion of the nation¡¯s treasury bills, non-government debt and a currency-hedged foreign debt in its portfolio all fell.
While the GPIF¡¯s holdings of government bonds are less than a 10th of the Bank of Japan¡¯s, the fund¡¯s tendency to buy on dips helps limit losses in the fixed-income market, especially when it¡¯s weighed down by concern over a rapid decrease in the BOJ¡¯s debt buying.
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