MUFG plans to sell dollar AT1 bonds in first for Japanese banks

BLOOMBERG

Mitsubishi UFJ (MUFJ) Financial Group  Inc has mandated banks to sell dollar-denominated Additional Tier 1 bonds, in what looks set to be the first such offering in the US currency by any Japanese lender.
The nation’s banks have long issued AT1 notes in yen because of lower borrowing costs. But they may consider selling such debt in dollars to help mitigate foreign-currency risk in their capital ratios, given they can get squeezed when the yen depreciates, BI credit analysts including Pri De Silva wrote in September. About a third of MUFG’s assets are denominated in foreign currency, the BI analysts wrote.
For the MUFG deal, banks will arrange a series of investor meetings and calls in Asia, Europe and the US starting on October 16, according to information from person familiar with the matter. It’s expected to be a benchmark-size offering of perpetual bonds that can be called after 5.25 years, said the people, who asked not to be identified because they’re not authorised to speak about it.
The offering is aimed in part to help diversify AT1 funding, which is concentrated at domestic institutional investors, and improve mid-to-long term capital management, according to an email from MUFG.
If it proceeds, the deal would be the first such offering by any Japanese bank in dollars, according to Bloomberg data. New issuance of AT1 instruments in dollars restarted in the summer after a freeze triggered by the US regional banking crisis and the historic $17 billion wipeout of Credit Suisse’s securities.