CLO Market's Japanese Buyers Face More Regulatory Scrutiny
- FSA questioned Norinchukin and other CLO investors: officials
- Regulator is concerned leveraged-loan quality may be falling
Photographer: Robert Gilhooly/Bloomberg
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One of the world’s biggest buyers of collateralized loan obligations is attracting increased scrutiny from Japan’s financial regulator, which is concerned about the rapid buildup of CLO holdings on bank balance sheets.
Norinchukin Bank, the agricultural lender that boosted holdings of top-rated CLO tranches by about $10 billion last quarter, spoke with Japan’s Financial Services Agency this year to answer questions about its portfolio, FSA officials said in an interview. Japan Post Bank Co. and Mitsubishi UFJ Financial Group Inc. were also questioned by the FSA about how they manage risks related to the complex debt products, the officials said.