Japanese life insurers are looking to buy more foreign bonds in the six months to March as yields on domestic bonds have fallen to uneconomical levels due to the Bank of Japan's massive purchases as part of its monetary easing program.

Still, most of their buying will be made with currency hedges and the pace of their buying is expected to slow after fervent demand in April-September, suggesting the shift toward foreign debt will have limited impact in pushing the yen lower.

Investment plans by Japanese life insurers, which collectively manage more than 180 trillion yen ($1.65 trillion) of assets, are closely followed by financial market players.

"Frankly, domestic yields are very low and the environment is not conducive for domestic bond investment," said Kazuo Sato, general manager of finance and investment planning at Nippon Life, Japan's biggest private insurer.

"We will have no choice but to invest in foreign bonds if yields stay low or do not rise according to our forecasts," he told a news conference last week.

The 10-year Japanese government bond yield hit a 1-1/2-year low of 0.460 percent this month, having fallen from 0.640 percent at the start of the current financial year as the BOJ soaks up roughly 70 percent of the government's debt sales.

The BOJ's purchases is a key plank in its strategy to spur sustainable economic growth and vanquish 15 years of deflation.

Many insurers said they increased foreign bonds sharply in the first half of the current financial year to March.

Data from the Ministry of Finance reflected the shift, showing Japanese insurers bought a net 3.289 trillion yen ($30.1 billion) of foreign bonds in April-Sept, their biggest purchase since the ministry started collecting data in 2005.

But some also said the pace of buying is likely to slow after the heavy purchases.

Sumitomo Life, the fourth-largest insurer, said it does not plan to increase the holdings of foreign bonds after it had already "front-loaded" its investment in foreign bonds.

Their shift came as Japanese Prime Minister Shinzo Abe called on the country's largest pension fund, the Government Pension Investment Fund (GPIF), to reduce JGBs and increase risk assets.

Japan's government will approve on Friday allocation targets for the GPIF which aim to raise the portion of Japanese shares to 25 percent of its portfolio from the current target of 12 percent, two government sources said.