Short-Term Japan Bonds Hold Allure for Bank Managing $17 Billion

One of Japan’s largest regional banks is testing the country’s choppy bond market by investing in shorter-term notes to secure higher returns, while avoiding longer-dated securities as interest rates rise.

Joyo Bank Ltd. has been selling low-yielding Japanese government bonds bought before the central bank scrapped its negative-rate policy two years ago, and replacing them with higher-yielding notes, Yoshitsugu Toba, who heads the markets division. It is purchasing the shorter end of medium-term bonds, referring to those with two- to seven-year tenors.