Korea Investment & Securities is planning to purchase unhedged ultra-long-term Japanese government bonds for the first time, seeking to capitalize on attractive yields and expectations for continued yen appreciation against the dollar.

The company, which manages approximately $63 billion in assets, began buying three-month and six-month Japanese government bonds about a decade ago, but this marks its first foray into longer-maturity Japanese debt.

Japanese 20-to-40-year government bond yields are hovering near multi-year highs, driven by the Bank of Japan's gradual reduction in bond purchases and concerns over Japan's substantial fiscal deficit and rising inflation. Korea Investment & Securities plans to begin purchasing ultra-long Japanese bonds next month, adding to overseas investor demand. Foreign investors have been net buyers of ultra-long Japanese government bonds for seven consecutive months through July.

"After ten years, we're looking at the Japanese market again, but this time it's very different," said Joon Kim, Seoul-based global fixed income director and portfolio manager. "We want to buy and hold ultra-long Japanese government bonds for the long term."

Korean 30-year government bond yields currently trade approximately 40 basis points below their Japanese counterparts, with Japanese 30-year yields recently reaching their highest levels since the bonds were first issued in 1999.

Meanwhile, Kim expects the narrowing interest rate differential will support the yen against the dollar as the Bank of Japan and Federal Reserve pursue divergent monetary policy paths.

According to data from Korea's Financial Supervisory Service, Korea Investment & Securities is the country's second-largest securities firm, with total assets exceeding 88 trillion won ($63 billion) as of March 2025.