For years it was best known as Japan’s Collateralized Loan Obligation (CLO) whale – a ¥56.4 trillion ($357 billion) investment giant with a seemingly insatiable appetite for returns in an era of rock-bottom interest rates.
Now Norinchukin Bank has become one of the biggest victims of a very different financial world, where ever-increasing borrowing costs are taking a painful toll on the market’s weakest hands.
The agricultural bank surprised the market this week by saying it would sell $63 billion of low-yield U.S. and European government bonds that had become unprofitable to hold after the company’s shorter-term borrowing costs rose. The privately held company warned that losses could reach ¥1.5 trillion ($9.5 billion) this fiscal year, tripling the estimate made less than a month ago.
