For years, it was best known as Japan¡¯s Collateralized Loan Obligation (CLO) whale ¡ª 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.
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