Japan Warns Its Banks About Risky U.S. Debt

TOKYO—Japanese regulators have warned the nation’s banks for the first time about the risk of investing in overseas securitized corporate loans, which have run into trouble from a wave of U.S. bankruptcies.

Japan’s banks collectively hold nearly 20% of the $750 billion global market for corporate debt packaged into securities called collateralized loan obligations, according to a report by the central bank and the Financial Services Agency—an outsize portion given that the securities aren’t issued in Japan.