Japan’s Mizuho mandates Merrill for large synthetic CLO
Mizuho Corporate Bank has mandated Merrill Lynch for what could be Japan’s largest synthetic collateralised debt obligation (CLO), according to market sources in Tokyo.
Sumitomo Mitsui Banking Corporation is also planning to sell a balance sheet synthetic CLO worth about ¥500 billion before the end of the year.
Sources point out that other smaller banks are also considering issuing synthetic CLOs to improve their financial ratios and comply with capital adequacy guidelines from the Bank for International Settlements.
Bankers in Tokyo said recent mergers and consolidations in Japan’s banking sector will continue to drive the need for those banks to issue synthetic CLOs. Rating agency Moody’s said out of 11 synthetic collateralised debt obligations (CDOs) sold this year, six were balance-sheet CDOs.
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