(Bloomberg) -- One of the world’s biggest buyers of collateralized loan obligations faces increased scrutiny from Japan’s financial regulator, which is concerned about the rapid buildup of CLO holdings on bank balance sheets. Lawyers from Conyers, an international offshore firm, provided an update on the Japanese Risk Retention Rule that focused on the effect on CLOs. Norinchukin Bank, Japan’s largest agricultural lender. Tuesday, August 06, 2019. Tuesday, February 05, 2019. In fiscal 2019, the Bank launched a local subsidiary, Norinchukin Bank Europe N.V., in the Netherlands, where continuing growth is expected as a source of profitability both in financial and non-financial businesses in Europe, which is experiencing significant changes due to Brexit and other issues. Its CLOs in the U.S. and Europe make up some 7% of … Analysts have also turned to a Bank of England report, which last year contained a table suggesting Japanese banks held about 10% of the $750 billion global CLO market in 2017. Japan’s Norinchukin Bank has been the biggest buyer of the top-rated tranche of European CLOs this year and has invested at a spread 6 basis points lower than the broader buyer base. The bank later cut back purchases in the U.S. and Europe in the second quarter, Bloomberg has reported. A Norinchukin spokesman said the bank held a Yen130 billion ($1.24 billion) unrealized loss on its CLO portfolio at the end of June, down from the $3.7 billion March-end figure it disclosed in May. At a time of negative government bond yields at home, Japanese banks have been enthusiastic purchasers of US and European CLOs, with agricultural lender Norinchukin Bank alone amassing 7.9 trillion yen (S$97.93 billion) of the assets. Nochu's CLO holdings up 8% in Q2 while JP Morgan buys even faster. Norinchukin Bank, starved of yields thanks to Japan’s negative interest rates, is expected to keep buying AAA-rated tranches in Europe until at least the summer, even as Japanese authorities scrutinise how the region’s financial institutions operate in the global CLO market. But when other institutions quickly stepped in to snap up the AAA tranches Norinchukin had been greedily consuming, it only served to underline the continuing attractiveness of CLOs. Other big buyers include Wells Fargo & Co. and JPMorgan Chase & Co., which each owned about $30 billion worth of CLOs at the end of the first quarter. Norinchukin Bank owns about 10% of the $700 billion market for corporate debt that was packaged into securities called collateralized loan obligations. “The market has moved away from its reliance on Japanese anchor Triple A investors,” a London-based CLO investor said. A Norinchukin spokesman said the bank held a Yen130 billion ($1.24 billion) unrealized loss on its CLO portfolio at the end of June, down from the $3.7 billion March-end figure it disclosed in May. But managers and arrangers across the market say the agricultural lender plans to hike the interest it seeks on the debt by 3 to 4 basis points for future deals in both Europe and the U.S. Citibank. Securitization investors and traders have told GlobalCapital that CLO anchor investor Norinchukin Bank has taken a step back from both the US and European markets. Norinchukin Bank’s CLO portfolio grew another 8% in the second quarter to JPY 8 trillion ($74.12 billion) by 30 June, according to the bank… At the time Norinchukin said it would pause making new investments as it re-evaluated its holdings. Japan Post Bank is another big buyer, with ¥1.52 trillion CLO holdings at September 30. Norinchukin said in May that it had unrealized losses of about ¥400 billion as of March on its CLO portfolio, and its Chief Executive Kazuto Oku said it would refrain from making new investments in CLOs. Norinchukin Bank owns about 10% of the $700 billion market for corporate debt that was packaged into securities called collateralized loan obligations. There tends to be a lag between when banks agree CLO deals and book them. Norinchukin bank’s massive holdings of collateralised loan obligations ties deposits of Japan’s agricultural businesses to health of American companies. But what has been reported in the US media is that banks in Japan hold about $140 billion or so of US CLOs. Wells Fargo, JP Morgan, and Citi are the largest bank owners of CLOs. But it remains committed to staying in the market. One fairly small bank alone, Norinchukin Bank (farming and fishing) holds about $70 billion of CLOs. Norinchukin Bank has put the brakes on a planned return to the European CLO market, opting to take a cautious approach after the UK voted to quit the European Union. Norinchukin Bank: Key Facts and Statistics - Q1 June 2020. Norinchukin Bank held ¥7.7 trillion ($71 billion) in CLOs at the end of March, while Mitsubishi UFJ Financial Group Inc. held ¥2.3 trillion and Japan Post Bank Co. had ¥1.8 trillion. Norinchukin’s CLO holdings increased again last quarter, with the bank’s exposure to the asset class standing at JPY 6.8 trillion ($62.2 billion) on 31 December Despite Norinchukin’s reduced activity, the U.S. CLO market has been solid for most of 2019. At the time Norinchukin said it would pause making new investments as it re-evaluated its holdings. In the last nine months of 2018, Norinchukin increased its CLO investments by almost 80%. Japan's Biggest CLO Buyer Taps the Brakes. By Hugh Minch. Norinchukin Bank The Info: Size ($ in 1000's) At 06/30/2020: $5,860,253 At 03/31/2020: $5,121,698 Combined Holding Report Includes: Norinchukin Bank The Norinchukin Zenkyoren Asset Management Co. … I don’t read the industry or bank data for Japanese banks, in part because I can’t read Japanese, and that’s where the good stuff is. Some took the flight from the market by Japan’s Norinchukin Bank last year, following a mild warning about the market from the country’s central bank, as a sign that all was not well. Add in Japanese mega-buyer Norinchukin Bank's return after a dramatic second quarter pullback, and industry veterans see a battle brewing for the top-rated CLO tranches. The largest Japanese buyer is Norinchukin Bank which owns a little over $68 billion worth of CLOs, a level much higher than any U.S. bank. Norinchukin Bank, a cooperative for farmers and fishermen, has notably built a global portfolio of $68 billion (¥7.4 trillion) in CLO paper, up from $62.6 billion (¥6.8 trillion) at the end of 2018 and $35 billion (¥3.8 trillion) a year earlier. Moody's Investors Service 29 Jul 2020 Credit Opinion Norinchukin Bank: Update to credit analysis. There is another twist to this story. At a time of negative government bond yields at home, Japanese banks have been enthusiastic purchasers of US and European CLOs, with agricultural lender Norinchukin Bank alone amassing 7.9 trillion yen (S$97.93 billion) of the assets. But during the third quarter, the firm's CLO holding dipped slightly. That number has probably since risen, given that agricultural lender Norinchukin Bank alone had 8 trillion yen ($75 billion) of the instruments in June. During the lead up to the 2008 banking crisis a trigger point was a … Norinchukin increases CLO holdings to $62 billion. Norinchukin Bank held ¥7.7 trillion ($71 billion) in CLOs at the end of March, whileMitsubishi UFJ Financial Group Inc. held ¥2.3 trillion and Japan Post Bank Co. had ¥1.8 trillion. In the last nine months of 2018, Norinchukin Bank increased its CLO holdings by almost 80%. By Hugh Minch. Norinchukin Bank, a cooperative lender to the agricultural, forestry and fishing sectors in Japan, held an extraordinary ¥8 trillion of CLO investments in June this year. Japanese banks now own about 15 percent of outstanding collateralized … A building used by Norinchukin Bank is seen in Chiyoda Ward, Tokyo, in 2015. The privately held bank’s $62 billion CLO portfolio is larger than either of the two biggest U.S. bank buyers, Wells Fargo & Co. and JPMorgan Chase & Co. And its influence is growing: Norinchukin added about $10 billion to its holdings in the last three months of 2018, nearly a third of all U.S. and European CLO issuance over that period. Amid heightened scrutiny in the Japanese CLO market in April 2019, Japan’s largest buyer of CLOs –Norinchukin Bank, took a break from their purchasing, but has since started buying CLOs again. The firm has been noted as the biggest buyer of CLO paper. Flowering market: The Norinchukin Bank, which serves Japans agricultural and fishing collectives, has been taking ever bigger slices of the international CLO market. But it remains committed to staying in the market. Other big buyers include Wells Fargo & Co. and JPMorgan Chase & Co., which each owned about $30 billion worth of CLOs at the end of the first quarter. According to several news reports (one here from Bloomberg), Norinchukin Bank has leveled off its CLO buying in recent months. Due to their “expertise” in the space, the likes of KKR sell the product (the CLO) and earn fees as CLO managers. Has leveled off its CLO buying in recent months quarter, the CLO! 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