In an attempt to encourage Japanese banks to rid themselves of bad debt, the Japanese government is bringing its first non-performing loan securitization to market in which it will act as both trustee and servicer.

Marking the first time that the government has stepped in to rid the banking sector of its millions of dollars of bad loans, Resolution & Collection Corp. (RCC), a governmental agency, has mandated Goldman Sachs and Mitsubishi Trust & Banking Corp. to lead the Yen 9.6 billion (U.S. $7.2 million) securitization. The transaction, RCC Trust 1 2002-1, is expected to launch this month, and will be privately placed within the Japanese market.

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