Japan Regulator Warns Banks on Risks of Repackaged JGBs.

The Financial Services Agency in Japan has warned regional banks about the risks associated with investing in repackaged government bonds, which have been gaining popularity. These products bundle Japanese government bonds with derivatives to enhance returns, but the FSA is concerned about potential negative spread and the need for proper risk management. While some banks are attracted to these products because they do not have to mark them to market, the returns may be lower when fees are considered. The FSA has previously issued a similar warning and is urging banks to be cautious. [Extracted from the article]