International rating agency Moody’s Investors Service said today it rated a record ¥3.02 trillion ($25 billion) of collateralised debt obligations (CDOs) in the first quarter of the year. That compares to full-year volume of ¥3.14 trillion in 2002.“The ability of the market to absorb such a huge volume in a single quarter shows that the range of CDO investors is much wider than previously thought,” Moody’s said in the report.
The agency said synthetic CDOs accounted for ¥2.32 trillion, or 77%, of the first quarter’s issuance volume, primarily due to two large synthetic balance sheet collateralised loan obligations (CLOs), worth ¥1 trillion each, issued by Sumitomo Mitsui Banking Corporation and UFJ Bank ahead of the end of the fiscal year-end on March 31.
Up to March 31, Moody’s said 19 out of the total 24 CDO deals in Japan were balance sheet CLOs, accounting for a total volume of about ¥5.23 trillion, or 99% of total volumes. “The surge in balance-sheet CLO issuance was driven by Japanese megabanks - including Mizuho Corporate Bank, Sumitomo Mitsui Banking Corporation and UFJ Bank - for the purposes of meeting BIS regulations,” Moody’s said.
More on Regulation
EU authorities claim hands are tied by WGMR proposals on non-cleared margin requirements
Banks chase 5.2 million customers who are still to complain
Regulator announces reforms in response to financial crisis failings
Matherat to Deutsche, O'Malia to Isda - regulatory moves worry some
Sign up for Risk.net email alerts
Nominated for two technology awards
Nominated for post trade technology award
Sponsored webinar: Collateral and counterparty tracking
Isda directors warn on fragmentation, access and liquidity - but expect problems to pass
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.