San-in Godo Bank, operating in Japan’s least populated area, is planning to shift its focus back to Japanese government bonds as interest rates rise. Amidst losses from investing in U.S. debt due to the Federal Reserve’s interest rate hikes in 2022, the bank sees an opportunity in Japanese bonds as yields have climbed above 1%. Previously, banks opted for higher returns from foreign debt, but the current market conditions have made JGBs more attractive.
In an interview, Toru Yamasaki, President of San-in Godo Bank, expressed that JGBs will be their main investment going forward. He emphasized the benefits of domestic bonds over foreign debt for a regional bank like theirs. Despite once holding ¥1 trillion worth of Japanese notes, their current holdings are now less than half of that amount.
This strategic shift by San-in Godo Bank could potentially influence other banks to reconsider their investment strategies and have global repercussions in the finance sector.