Yield-hungry Japanese investrors need to find alternative investment destinations as the high hedging costs make U.S. debt less attractive. When looking at foreign ownership of euro-zone bonds, Japanese holdings are disproportionately focused in France at the espense of countries like Italy and Spain. Combined with three-month currency-hedges, Italian and Spanish 10-year government notes yield Japanese investors around 2.3% and 1.9% respectively, far higher than the roughly 1.1% net return for French debt.

– source Bloomberg

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