Japan Regulators Are Set to Shake Up the U.S. Loan Market
- FSA aims to release risk-retention rule soon, official says
- Q&A document shows multiple requirements for CLO investors
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Japan is poised to issue rules outlining the hoops that banks will need to jump through to continue large-scale buying of bundled U.S. corporate loans.
The Financial Services Agency aims to release the rule for investments in collateralized loan obligations as early as next week, a senior government official said. The regulation due to take force on March 31 will impose onerous capital burdens on CLO investors if originators of the underlying assets don’t retain a stake in them -- unless the buyers can prove the products were made appropriately.