Collateralized bond obligations (CBOs) are relatively new in Japan but are quickly gaining acceptance in the market, as shown by two CBOs being readied for launch next month.

Both CBOs are backed by a pool of Eurobonds newly issued by a diverse group of Japanese companies, and will issue three-year notes to investors in Japan and Europe. The senior tranches of each issue have been rated triple-A by Japan Rating & Investment Information, although some of the underlying corporates in each transaction are unrated. Pricing for both CBOs is set for mid-June.

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