For years, it was best known as Japan’s Collateralized Loan Obligation (CLO) whale — a ¥56.4 trillion ($357 billion) investing giant with seemingly insatiable appetite for yield in an era of rock-bottom interest rates.
Now Norinchukin Bank has become one of the biggest casualties of an entirely different financial world, where higher-for-longer borrowing costs are exacting 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-yielding U.S. and European government bonds that had become unprofitable to hold after the firm’s shorter-term funding costs jumped. The unlisted firm warned that losses this fiscal year may swell to ¥1.5 trillion ($9.5 billion), triple an estimate made less than a month ago.