...a sad story for the hard working Japanese farmers entrusting...

...a sad story for the hard working Japanese farmers entrusting their life savings without knowing exactly how they were deployed (and gambled away).

.. There is No Free Lunch- If you are getting a higher yield from what had come across as a 'safe' investment, you are always assuming a larger risk that you may not understand. By the time you do, you may find that redemption is frozen.
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Norinchukin ("Nochu") is Japan's "farmer" bank: it holds around $600 billion in deposits from Japan’s agricultural and fishing collectives. Most of the pensions of Japan's lowest-income workers are stored here.

Until recently, Nochu was best known as the CLO whale: it had invested over $40BN billions in various US CLOs (as least it was in the less risky tranches) making it one of the world's largest CLO buyers.

In 2022, the bank stopped its purchases of CLOs after the near-collapse of the UK bond market, the subsequent credit market shock and BOE bailout. And now, the bank which Japan's farmers had entrusted their savings to, has finally admitted to billions in unrealized losses on its foreign bonds - as a result of surging rates and plunging bond prices - on its massive bond portfolio, which is forcing it to liquidate a huge chunk of its fixed income holdings: it is expected to sell 10 trillion yen of its 31 trillion in bonds to plug the hole from unrealized losses.

Unless Nochu can find an investor to throw more good money after bad, the bank's liabilities - farmer pensions - will be impaired (big haircuts). This would be the first and most notable example of Japanese pensioners suffering major losses due to monetary policy error; this in a nation where pensions have historically been sacrosanct and only invested in the safest of securities (40 years of ZIRP meant few had expectations for capital gains).

How many other banks will be impaired if and when a selling cascade emerges to frontrun Nochu's $60BN+ liquidation?

How many more pensioners will see their life savings slashed or wiped out in the coming months/years because they entrusted their life's work to a failing system?

https://x.com/zerohedge/status/1803503734791741597