Japanese bank spreads hit on renewed equities portfolio concerns

Spreads on Japanese bank credit default swaps widened an average 10 basis points this week, sparked by renewed investor concerns about unrealised losses linked to their large equity portfolios.

UFJ and Mizuho were the two most actively traded credits, with the cost of their five-year senior debt protection trading at 135/155bp and 130/160bp, respectively – out from around 110/140bp last week. Bank of Tokyo Mitsubishi’s credit default swap spread widened by 10bp to 60/75bp, from 50/65bp last week, while Sumitomo Mitsui Banking Corporation’s spread widened to 75/90bp, from 65/85bp.

In quiet trading, there was some activity in sovereign protection, with traders arbitraging the Japanese

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