Japanese banks have been bulking up on US junk corporate credit for the last year, driven entirely by an increasingly difficult reach for yield. That means overlooking dangers and risks which in other less distorted times would have been taken more seriously. The end result is a large and growing distortion in a key part of the credit markets.
Eurodollar University’s Money & Macro Analysis
Bank of Japan Financial System Report October 2019
https://www.boj.or.jp/en/research/brp/fsr/data/fsr191024a.pdf
VanEck Looking Beyond AAA Rated CLOs Pays Off
https://www.vaneck.com/us/en/blogs/income-investing/looking-beyond-aaa-rated-clos-pays-off/
Deutsche Bank What impact is ‘higher for longer’ having on the CLO market in 2024
https://flow.db.com/trust-and-agency-services/what-impact-is-higher-for-longer-having-on-the-clo-market-in-2024
Bloomberg A $1.3 Trillion Fund Pool for Junk-Rated US Firms Has Unlikely Lifeline: Japan’s Banks
https://www.bloomberg.com/news/articles/2023-04-20/the-1-3-trillion-clo-market-grows-more-dependent-on-japan-banks
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