The $1.3 Trillion CLO Market Grows More Dependent on Japan Banks

Dealmakers in US collateralized loan obligations are counting more than ever on an old friend: Japanese banks.

In a sign of how Japan’s influence has grown, its regional banks have become a go-to buyer in the $1.3 trillion market — an important source of financing for junk-rated US companies. Along with bigger lenders and insurers, their loyalty to CLOs is a lifeline as some US buyers pull back.

Insurer Sumitomo Life Insurance Co.is considering buying more of the securities. Norinchukin Bank has resumed looking at CLOs after stepping away last year. And regional banks have been teaming up to ...