The Biggest Bank of Japan Being Pushed Deeper into The CLO Market of Europe

By | September 18, 2019

Japan’s biggest bank will extend its presence on the CLO market in Europe this month by becoming a first-time arranger.

Since the financial crisis, the numerous banks arranging European deals has remained relatively static at about 12, despite the increase in the issuer base as well as a new supply of € 20 billion ($22 billion) in 2019. There can also be entry barriers from some established regional managers who claim that they do not need more arrangers.

First Steps

MUFG’s mandate to organize NIBC Bank NV’s third European CLO remains to push for securitized products, led by Tricia Hazelwood. Asif Khan runs the CLO business while Krishna Shah, who joined the bank in March 2016, has been managing the team in Europe. The lender also hired Loomis Sayles & Co.’s Keith Allman this year to help expand its ABS business.

A Mizuho spokeswoman declined to comment on the CLO plans of the bank. The aspirations of these banks come at a moment when Japanese regulators are increasingly scrutinizing the financial firms of the nation to determine their exposure to overseas assets which also includes dangerous loan products.

Bigger Pool

The fast development of the European issuer base over the previous three years to 51 executives from 33 at the end of 2015 could improve the need for more arrangements to accommodate the extra issue.

Moreover, being able to tap into an extra arranger can generate a chance or an opportunity for those executives who are looking to rapidly price a deal. Long pipelines of warehouses can be built by the most effective arrangers. Instead of waiting and jostling for attention in a busy pipeline, however, some may opt for a clearer pipeline bank with more time to market the transaction.