Norinchukin Bank plans to liquidate $63 billion in US and European bonds.

Japan’s Norinchukin Bank indeed plans to liquidate $63 billion in US and European treasuries to mitigate unrealized losses. Here are the key points:

• Liquidation Plan: Norinchukin Bank, a major Japanese bank with $681.6 billion in total assets, intends to sell approximately 10 trillion yen (equivalent to $63 billion) worth of US and European sovereign bonds. The bank aims to complete this sell-off by March of next year.
• Unrealized Losses: The bank faces significant unrealized losses on its bond holdings, which totaled around 2.2 trillion yen as of the end of March. To address this, Norinchukin Bank’s CEO, Kazuto Oku, emphasized the need for management changes. The bank plans to shift its investments away from sovereign interest rate risk and diversify into assets with corporate and individual credit risk.
• Market Impact: While this move may not create substantial sell-side pressure in the US Treasury market immediately, it reflects the bank’s efforts to manage risk. However, if Japan’s currency struggles worsen, there could be potential effects on Treasury market yields, especially in the 2-5 year segment.

Japan remains the largest foreign holder of US Treasury securities, with its banks, pension funds, and other institutions holding $1.87 trillion as of March 2024