TOKYO, April 22 Reuters When Japan39;s biggest banks helped finance a 34 billion deal last year for medical supply maker Medline, one of the largest leveraged buyouts since the financial crisis, the famously cautious lenders signalled their ambitions in riskier, and more lucrative, lowgrade U.S. debt.

Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc, eagerly hunting yield abroad after years of zero rates at home, have beefed up U.S. operations and are now targeting business there lending to lowerrated borrowers and underwriting junk bonds.

But their timing when interest rates are rising and the highyield debt market is slowing means they will face increasing risks and dwindling opportunities, testing their staying power.

We39;ll need to closely monitor the course of the markets following the latest contraction, said Shinichi Sato, an executive officer at Mitsubishi UFJ, Japan39;s biggest lender.

He was nevertheless positive about the prospects The market for noninvestment grade financing will likely remain on a growth trend.

The big Japanese banks still have a long way to go to become major players in the market.

Mitsubishi UFJ, which has a tieup with Morgan Stanley, had a 1.6 share of the estimated 18 billion fees in the noninvestment grade debt market last year, according to Dealogic, the most of any Japanese bank.

It aims to move up five spots in the league table for noninvestment grade bonds and loan…