TOKYO / Bloomberg
Mitsubishi UFJ Financial Group (MUFG) Inc., Japan’s largest bank, sold the equivalent of $9.4 billion in bonds this week to help boost buffers to meet regulatory requirements, making it the biggest issuer of corporate notes globally this week.
MUFG offered 300 billion yen ($2.66 billion) in higher-tier capital-counting notes to institutional investors on Friday, in addition to 200 billion yen in other subordinated debt sold, according to pricing details released for the deals. Add that to $5 billion in dollar-denominated senior bonds sold this week that may be written down if the lender needs to be liquidated, and MUFG is the world’s biggest corporate note seller of the week as in Tokyo, according to data compiled by Bloomberg.
Mitsubishi UFJ became the first Japanese lender to sell bonds under a new rule known as total loss-absorbing capacity, or TLAC, devised by global regulators to avoid future government bailouts of financial institutions.
The world’s biggest banks may need to raise as much as 1.1 trillion euros ($1.2 trillion) to meet new rules laid down by financial watchdogs, depending on the instruments considered, regulators said last year.
MUFG sold bonds overseas and in Japan this week after determining there was strong demand for its debt at home and abroad, said Kazuto Yoshida, a spokesman for the Tokyo-based bank. With uncertainty in the external environment growing, and to bolster its finances to support growth and manage capital, the group decided to proceed with TLAC and capital-compliant debt sales, he said
The Financial Stability Board, created by the Group of 20 nations in the aftermath of Lehman Brothers Holdings Inc.’s collapse, said in November that most systemically important banks must have liabilities and instruments “readily available for bail in” equivalent to at least 16 percent of risk-weighted assets in 2019, rising to 18 percent in 2022. Lenders in emerging markets were given a longer period to meet the requirements. Japan’s three largest banks are counted among the world’s systemically important lenders.
“Yes, it may look like a large amount but it is also a very big bank,” said Raymond Spencer, a Tokyo-based analyst at Moody’s Investors Service, speaking about the MUFG offerings. “Obviously, the market does remain hungry for yield.”