Bank of Japan says risk of CLO defaults ‘basically small’

bank of japan 2
By Tom Brown
29 Oct 2019

The Bank of Japan appears to have softened its stance on the country’s banks buying foreign CLOs, reporting that credit risk in the asset class is “subdued on the whole” following a slowdown in investment in the asset class.

The BoJ released a report last Friday investigating the impact of increased Japanese investment in CLOs, which now account for 15% of the entire market. It said that the risk of defaults to the assets held by Japanese banks is small, although concerns with the market remain.

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