Japan’s government pension fund is emerging as a major source of demand for government debt, just as the central bank plans to cut bond purchases.
The GPIF’s holdings of government bonds rose 25% to ยฅ50.3 trillion ($311 billion) in the fiscal year ended March 31, according to Bloomberg analysis of fund data released last week. This came as the share of Treasuries, non-government debt and currency-backed foreign debt in the country’s portfolio all fell.
Although GPIF’s government bond holdings are less than one-tenth of those of the Bank of Japan, the fund’s tendency to buy on declines helps to limit losses in the bond market, especially when the fund is facing concerns about a rapid decline in the BOJ’s debt purchases.
