Warning To Japan Banks About Risky Debt From US

EDITOR NOTE: Collateralized Loan Obligations are making Wall Street richer the same way that bundled mortgages did a short time ago--with the same risks for the economy. Japan warns its banks about the risks of overseas (read: American) CLOs. 

TOKYO—Japanese regulators have warned the nation’s banks for the first time about the risk of investing in overseas securitized corporate loans, which have run into trouble from a wave of U.S. bankruptcies.

Japan’s banks collectively hold nearly 20% of the $750 billion global market for corporate debt packaged into securities called collateralized loan obligations, according to a report by the central bank and the Financial Services Agency—an outsize portion given that the securities aren’t issued in Japan.

Read the rest on WSJ