Downturn in Japanese banking sector poses risks to CLO bid

Japan dollars Fotolia 230x150
By Alexander Saeedy
13 Mar 2019

Several CLO issuers in the US and Europe have come to depend on Japanese investors to anchor triple-A tranches, but observers say Japan’s banks may no longer be able to soak up foreign paper if a bubbling banking crisis forces banks to clean up their act at home.

Beset by negative interest rates, a shrinking population and a glut of savings, the Japanese economy can scarcely create yielding assets, pushing its banks abroad to buy debt that can offset its loss-making domestic banking sector.

But the limitations of that strategy became apparent when Mizuho announced last ...

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