950807

Japanese investors

buy record high

foreign bonds

TOKYO: Japanese investors bought a record net $20.199 billion worth of foreign bonds in June, up from $13.221 billion in May, the Finance Ministry said.

Purchases of US Treausry bonds accounted for some 20 percent of that amount, while about half went toward Euroyen bonds, the ministry said. Euroyen bonds are denominated in yen but sold outside Japan.

"Demand for Euroyen bonds has been high this year because there's no foreign exchange risk, and these issues don't need to be marked to market," said William Campbell, fixed income strategist at JP Morgan Securities.

Japanese investors have been reluctant to buy foreign-currency-denominated bonds out of concern a rising yen could wipe out any gains. Euroyen bonds carry no foreign currency risk.

Euroyen bonds are also attractive to Japanese investors because they're not registered on any securities exchange. Under Japanese accounting rules, investors don't need to show losses on such securities.

Foreign investors sold a net $1.235 billion in Japanese bonds and bought a net $2.68 billion in Japanese stocks in June, the ministry said.-Reuter