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 are investors demanding more of in the CLO market?

• Lower interest rates

• Higher compensation for risk

• More transparency

• Longer maturity periods

Which country's regulatory actions are affecting the CLO market?

• Germany

• Japan

• China

• United States

What percentage of AAA-rated CLOs do Japanese banks account for?

• 10-15%

• 40-45%

• 20-25%

• 30-35%

How have high-yield bonds performed compared to leveraged loans?

• They have underperformed

• They have outperformed

• They have not been compared

• They have performed equally

What is the return percentage of high-yield bonds mentioned in the video?

• More than 6%

• More than 5%

• More than 7%

• More than 4%