(Bloomberg) -- The lender to Japanese farmers that once dominated the $1 trillion collateralized loan obligation market has set its sights on a European transaction that would seal its global comeback.

Norinchukin Bank is buying the bonds of a CLO from the region that will be issued and managed by Investcorp, according to people familiar with the matter who aren’t authorized to speak publicly. The Japanese lender will be the anchor investor for the AAA bonds, the safest and biggest portion of debt that’s created by repacking leveraged loans, the people said. 

The purchase will help confirm the reappearance of the bank, often called Nochu, on the global stage. It had returned to the US market late last year after stepping back from investing in CLOs in 2019 under political and regulatory pressures over the size of holdings. 

Credit Suisse is arranging the new CLO sale, according to the people. Pricing on the AAA bonds is expected to come in at 155 basis points over a European benchmark, according to one of the people. 

A spokesperson for Norinchukin Bank declined to comment on its plans when contacted by Bloomberg. Representatives for Investcorp and CS also declined comment.

Nochu earlier this year signaled its interest in resuming purchases in Europe, even as the war in Ukraine and recession fears added more volatility to markets. 

The lender has indicated that it has no intention of reclaiming its mantle as the biggest buyer of CLOs.

‘Whale’ Tag

Instead, the plan in Europe, as in the US, is to maintain its portfolio of CLO holdings. Nochu’s once-dominant role earned it the moniker of the ‘CLO Whale,’ bringing intense political and regulatory scrutiny.  

But even much reduced, Nochu’s return will inject fresh demand into a CLO market that has struggled to attract buyers for its AAA tranches this year. Moreover, since other Japanese banks have historically tended to follow Nochu’s lead, other Japanese investors are expected to become more active, the people said. 

The European CLO market hasn’t seen any new issuance in weeks as volatility in both CLO and the underlying leveraged loans have made it tough to put together deals. 

©2022 Bloomberg L.P.