Japan's CLO Buyers Seek Higher Rewards While Under Scrutiny

The video discusses the widening of spreads in top-rated securities issued by CLOs, highlighting that investors demand higher compensation for risk. This trend contrasts with similarly rated corporate securities. A significant factor is the Japanese regulatory crackdown on banks buying these securities, as Japanese banks are major buyers. The video also explores how this affects borrowing costs for risky U.S. companies and compares the performance of leveraged loans and high-yield bonds.

What impact might the crackdown by Japanese regulators have on the market for these securities?

What is the significance of Japanese banks being the biggest buyers of these loans?