For the first time since 2016, Iyogin Holdings is set to resume purchasing Japanese government bonds (JGBs). CEO Kenji Miyoshi confirmed the regional banking group will re-enter the market once yield volatility stabilizes, marking a significant departure from a decade-long avoidance of domestic debt.
The pivot follows a dramatic rise in Japan’s 10-year JGB yields to approximately 2.6%. This shift is driven by the Bank of Japan’s gradual retreat from its massive bond-buying program, reducing monthly purchases by ¥400 billion per quarter through 2027. Sumitomo Mitsui Financial Group has also signaled interest in rebuilding its JGB portfolio.
During the era of negative rates, regional banks were forced into exotic foreign investments to find returns. The return to JGBs reflects growing confidence in monetary policy normalization. For investors, this trend strengthens domestic bond demand while potentially reducing Japanese capital flows into US Treasuries. While banks benefit from a steeper yield curve, sectors like real estate face higher financing costs.