Norway Sovereign Fund plans to boost JGB Holdings
Norway’s Norges Bank Investment Management (NBIM), which oversees one of the world’s largest sovereign wealth funds, is considering significantly expanding its exposure to Japanese government bonds (JGBs) as it seeks greater portfolio diversification, Qazinform News Agency learned from JIJI Press.
In a letter submitted Tuesday to Norway’s Finance Ministry, NBIM proposed raising the share of Japanese government debt in its bond portfolio to 7.4% from the current 4.6%.
The proposed adjustment could translate into roughly $17 billion in additional JGB holdings, according to estimates cited by a U.S. media outlet.
NBIM manages investments generated from Norway’s oil and natural gas revenues. An increase in demand from the fund could provide additional support for Japan’s government bond market, potentially helping ease upward pressure on long-term interest rates and the yen’s depreciation. The yield on the latest 10-year JGB issue serves as a key benchmark for long-term borrowing costs in Japan.
The planned shift toward Japanese debt would come alongside a reduction in the fund’s exposure to sovereign bonds issued by the United States and eurozone countries.
NBIM is also proposing a broader change to its fixed-income allocation, with government bonds set to account for 50% of total bond investments, down from 70%.
Under the proposed restructuring, the fund’s holdings of U.S. Treasury securities could fall by around $80 billion. Such a reduction could contribute to upward pressure on long-term U.S. interest rates.
Earlier, Qazinform News Agency reported that South Korea’s exports jumped 53% year-over-year to a record 87.8 billion US dollars in May, marking the third straight month above the 80 billion US dollars mark.