Japan's first non-performing loan-backed securitization is in the pipeline, and may be launched as soon as the end of November, according to sources in Tokyo.

The transaction aims to securitize a portfolio of non-performing loans backed by real estate purchased from banks by Morgan Stanley Real Estate Fund (MSREF), one of the most active buyers of distressed assets in Japan. It will likely be placed with a handful of investors in the domestic market, where pricing in recent months has been tight compared to the Euromarket.

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