Mizuho becomes third Japan bank to sell AT1s after crisis
MIZUHO Financial Group is set to become the third major Japanese bank to sell Additional Tier 1 (AT1) bonds after Credit Suisse Group’s near-collapse set off a global fire sale, in the latest sign of a resilient local credit market and improved investor mood.
The lender is planning a yen-denominated two-part AT1 note, with pricing expected as early as July, according to underwriter Mizuho Securities. The size of issuance is yet to be determined.
Mizuho Financial’s offering would mark the third of its kind in Japan after Sumitomo Mitsui Financial Group became the first major global lender to sell the notes in the wake of Credit Suisse’s takeover by UBS Group, as part of which the embattled bank’s AT1s got written down. Mitsubishi UFJ Financial Group is also marketing a deal.
The riskiest type of bank debt, also known as contingent convertible bonds, has rebounded in recent weeks though prices remain below their pre-crisis level, according to a Bloomberg index.
Mizuho’s AT1 announcement follows hot on the heels of news that the Japanese lender is boosting its presence in US investment banking via the purchase of boutique firm Greenhill & Co.
Mizuho is planning to use the bond proceeds for working capital, a bank spokesperson said.
The short succession of AT1 sales in Japan also highlights the country’s nature as an outlier, where expectations for interest rates to stay low has boosted demand for higher-yielding assets.
“Demand for higher-yielding notes is rising in Japan as markets are expecting that rates will remain low for a while,” said Toshiyasu Ohashi, chief credit analyst at Daiwa Securities, adding that Sumitomo Mitsui’s recent sale has laid the groundwork for more such deals from the Japanese banking sector. BLOOMBERG
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