Boston Fed’s Rosengren warns about Japanese banks’ loan holdings
Exposure to CLOs now above Common Equity Tier 1 in one of Japan’s largest banks, data shows
The Japanese banking sector’s exposure to risky assets raises questions about how it might fare in a future downturn, Federal Reserve Bank of Boston president Eric Rosengren warned.
The prolonged period of low rates has pushed Japanese banks to invest in tranches of collateralised loan obligations, Rosengren said in a speech on June 20.
“Although the AAA tranches of CLOs receive high assessments from rating agencies,” he said, “they also pay substantial premiums relative to US Treasuries or
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