Page 463 - Invited Paper Session (IPS) - Volume 1

IPS177 Sayako K. M. et al.
(b) conduct a survey of the entities; or (c) calculate figures as residuals
and do not estimate the figures directly from the data sources.
3.4 Results
The total foreign debt securities are estimated to be about 369 trillion

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yen at the end of June 2018. Chart 4 shows that the foreign debt securities
held by GG, ICPF, and ODC account for around 80% of the total amount. The
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holdings by GG including investment by foreign exchange reserves and
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Government Pension Investment Fund (GPIF) account for around 35% of the
total foreign debt securities issues. The time-series data shows ICPFs gradually
increase their share over recent years while ODCs decrease amid the recent
upward trend in the U.S. interest rate. The BOJ’s Financial System Report
describes the recent movement of insurance companies in the following way,
"a breakdown of portfolios shows that purchases of domestic bonds, which
offer low yields, have been restrained amid the prolonged low interest rate
environment, while investment in foreign bonds and investment funds, which
offer relatively high yields, has increased."
Chart 5 illustrates the ratio of foreign debt securities in foreign securities
and shows more than 60% of foreign securities are investments in foreign debt
securities, except for the case of OFCs including securities investment trusts
sector in the FFA. The time series data shows the share of foreign debt
securities, most of which are denominated in U.S. dollar has gradually
decreased amid the recent upward trend of the U.S. interest rate.

11 The spot rate as of the end of June 2018 is 110.64 yen/dollar.
12 Foreign exchange reserves are foreign financial assets that can be used immediately and
under the control of monetary authorities for financing or regulating payments imbalances or
indirectly make adjustments for foreign exchange market intervention.
The GPIF "manage and invest the Reserve Funds of the Government Pension Plans entrusted
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by the Minister of Health, Labour and Welfare, in accordance with the provisions of the
Employees' Pension Insurance Act (Law No.115 of 1954) and the National Pension Act (Law
No.141 of 1959), and shall contribute to the financial stability of both Plans by paying out profits
of investment to the Special Accounts for the Government Pension Plans."
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