UPDATE:MUFG Unit Upgrades Bond Issue To $3.8 Billion To Bolster Cap Base
18 February 2009 - 3:33PM
Dow Jones News
Mitsubishi UFJ Financial Group Inc.'s (8306.TO) main banking
unit will nearly double its planned retail bond issuance to about
$3.8 billion, in a bid to prevent the slide in financial markets
from further eroding its weakened capital base.
Bank of Tokyo-Mitsubishi UFJ now intends to sell Y350 billion of
eight-year subordinated bonds to individual investors - up from its
initial plans for a Y200 billion issuance, according to a
regulatory filing with Japan's Ministry of Finance Tuesday.
Japan's biggest lender by assets is scheduled to price the bonds
Feb. 20 via lead manager Mitsubishi UFJ Securities. The sale period
runs from Feb. 23 to March 12 and the bonds will likely carry a
coupon between 2.3% and 3.3%.
The planned increase in the issuance size comes at a time when
Japanese banks have been struggling with slack domestic lending, a
deteriorating economy at home and abroad and hefty losses in the
value of their stock portfolios. MUFG's market capitalization has
dropped by nearly a quarter since the start of 2009,
underperforming a 16% slide in the Nikkei 225 Stock Average.
Those factors have squeezed earnings across the industry for the
April-December period, with many banks slipping into losses. MUFG
and Mizuho Financial Group Inc. (8411.TO), Japan's third-biggest
lender by assets, both swung into the red for the nine-month
period, hurt by losses on equity-holdings and inflated bad
loans.
With sharp drops in market valuations adding pressure to key
solvency ratios at the nation's lenders, a number of big sector
players are tapping markets for fresh funds.
Last week, Mizuho Corporate Bank decided to raise funds via
eight-year retail subordinated bonds. Total issue size and a coupon
- which is to be set between 2.38% and 3.38% - are expected to be
decided on Feb. 26, documents filed with the Ministry of Finance
showed.
Nomura Holdings Inc. (8604.TO), Japan's biggest brokerage, also
said in a shelf registration earlier this month that it will issue
up to Y300 billion in common stock, its first such issuance for 20
years. Nomura will issue the stock within a one-year period
starting Feb. 20, with some company watchers primed to expect the
issue soon rather than later.
-By Megumi Fujikawa, Dow Jones Newswires; 813-5255-2929; megumi.fujikawa@dowjones.com
(Atsuko Fukase contributed to this story.)