Japanese arbitrage CDO issuance to remain at standstill

There were nine synthetic CDOs issued in Japan in the first nine months of the year, all of which were balance sheet transactions. “Japan’s credit risk market is experiencing a tightening in credit spreads, due to the protracted low interest rate environment and excess liquidity," says the report. "Consequently, little issuance of arbitrage CDO transactions – referencing Japanese names – has occurred," it adds.

Moody’s has rated a total of 20 cash and synthetic CDO transactions in the first nine months of the year. These deals were worth ¥4.08 trillion ($34.8 billion), compared with 21 deals worth ¥2.4 trillion ($20 billion) over the same period last year. Moody’s noted that the difference in volume was due mostly to major banks offering balance sheet CDOs in the second quarter.

In the third quarter of the year, Moody’s rated eight CDOs worth ¥880.9 billion ($7.74 billion), including four primary collateralised loan obligations (CLOs). According to the rating agency, primary CLOs, along with re-securitisation, are the asset classes that will continue to grow most significantly in Japan.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here