COUNTRY REPORT JAPANincreasingly receptive to the issuance of
Green bonds and is slightly more developed
than the dollar Green bond market,
according to a lead, who pointed out that
euros have become comparable to US
dollars on a cross currency basis.
› AFLAC NARROWS GUIDANCE ON NOTES
US insurer AFLAC has tightened price
guidance for an offering of benchmark-
sized subordinated 30-year non-call 10
Global yen bonds.
The latest guidance is a narrowing to
180bp over 10-year offer-side swaps, or the
tight end of 180bp–185bp.
If the bonds are not called after 10 years,
the coupon would step up by 25bp over the
initial spread plus five-year offer-side swaps,
and again every five years.
Initial guidance was 175bp–195bp before
being tightened to 175bp–190bp.
The SEC-registered bonds have expected
ratings of Baa1/BBB/BBB+ (Moody’s/S&P/
R&I).
The bonds mature on October 23 2047.
The first call date is October 23 2027.
Mizuho, Morgan Stanley and SMBC Nikko are
leads.
The bonds will price on Tuesday at
earliest.
› CS HIRES FOR YEN PRO-BOND
CREDIT SUISSE GROUP, rated Baa2/BBB+/A–/A
(Moody’s/S&P/Fitch/R&I), has mandated
Credit Suisse, Mizuho Securities and SMBC Nikko
to arrange meetings with fixed-income
investors in Tokyo.
An intermediate maturity senior
unsecured yen-denominated Pro-Bond issue
may follow, subject to market conditions.SYNDICATED LOANS
› FIVE BACK HITACHI KOKUSAI LBOFive Japanese lenders, including the three
mega banks, have agreed to provide a
¥98.744bn (US$880m) financing package
to back KKR & Co’s planned ¥143.932bn
leveraged buyout of HITACHI KOKUSAI ELECTRIC,
according to Thursday’s filing from a special-
purpose vehicle of the private-equity firm.
Mitsubishi UFJ Financial Group, SMBC, Mizuho
Bank and Sumitomo Mitsui Trust Bank are
providing a ¥81.01bn seven-year senior
financing, split into a ¥10.924bn amortising
term loan and a ¥70.086bn bullet term
loan, while Development Bank of Japan is
making available a ¥17.734bn 7.5-year
bullet mezzanine loan.
MUFG, SMBC, Mizuho and SMTB are
making respective contributions of
¥28.3535bn, ¥28.3535bn, ¥16.202bn and
¥8.101bn.
Bain, Hitachi and Japan Industrial
Partners are investing ¥36.4bn, ¥5bn and
¥4bn, respectively.
The SPV, named HKE Holdings GK,
launched on Thursday an improved ¥2,900
offer per Hitachi Kokusai share, up from
¥2,503. It improved the bid after a third-party committee, reporting to Hitachi’s
chip-making equipment manufacturer, said
it did not support the initial terms. The
offer ends on November 24.
On the same day, US hedge fund Elliott
Management raised its stake in Hitachi
Kokusai to 8.59% from 7.11%, according to a
regulatory filing, one of several such hikes
since it first disclosed a stake last month.
Elliott, known for buying stakes in
companies in the middle of takeovers and
seeking better deals for shareholders, had
last raised its stake in Hitachi Kokusai to
7.11% in September. It has become Hitachi
Kokusai’s No 2 shareholder behind Hitachi,
which has a little over 50%.
Elliott has said the purpose of owning
Hitachi Kokusai shares was “investment”,
but also noted it would “discuss matters,
such as important proposals, depending on
situations”.
Nomura Securities is the financial adviser
to Hitachi Kokusai, while Credit Suisse is
the same to Hitachi.› ONE REIT RAISES TOKYO BULLETONE REIT, formerly known as SIA REIT,
has signed a ¥16bn bullet term loan for
the acquisition of real estate assets, the
Tokyo Stock Exchange-listed real estate
investment trust has said.
Mizuho Bank and Mizuho Trust & Banking
arranged ¥4bn, ¥6bn and ¥6bn tranches
with maturity dates on September 7
2020, September 7 2021 and September 7
2022, respectively. The resepctive interestSMBC raises US$4bn via two trades
Bonds Japanese lender sells US$1.5bn at operating level and US$2.5bn through holding companySUMITOMO MITSUI BANKING CORP sold bonds
of US$1.5bn at the operating level and
US$2.5bn through its holding company,
drawing an overwhelming investor response.
SMBC issued two-year fixed-rate bonds
and floating-rate notes, and holding
company SUMITOMO MITSUI FINANCIAL GROUP
extended its curve with sales of five-year
fixed-rate paper and floaters, and 10-year
fixed-rate notes.
Both trades were two times covered
and priced with little to no new-issue
concessions, which bankers said reflected
strong demand in the market for Yankee
FIG issuance.
The two-year fixed-rate piece priced at
Treasuries plus 57bp, or some 13bp-18bp
inside initial talk. At this level, the bonds
had some 3bp in concessions relative tooutstanding 2.05% 2019s. The total order
book was about US$3.3bn on the two-year
notes with the fixed-rate piece getting
US$1.9bn of that.
SMFG priced five-year fixed-rate bonds
and floaters at T plus 82bp and Libor plus
74bp, 23bp inside initial talk. The holding
company’s 10-year notes came at 100bp,
or 20bp inside talk. The final book was
US$5.4bn with the five-year fixed-rate piece
getting US$2.9bn and the 10-year attracting
US$1.6bn.
Compared with its outstanding 2027s, the
10-year’s final pricing offered a concession of
4bp. At 100bp, the 10-year also priced very
close to outstanding 10-year paper from US
lenders, which one banker described as a rare
success for a Yankee FIG. Goldman Sachs’s
3.5% October 2026s were trading at a Gspread of 120bp, while JP Morgan’s 2026s
were at 93bp.
“Yankee FIG issuance hasn’t been that
great this year, which explains the rush of
demand for this deal,” said one banker. “The
window seems wide open for more Yankee
FIGs in dollars.”
SMBC last came to the dollar market in
January, when it raised US$3.5bn from notes
of two, five and 10 years. It priced a €500m
green bond earlier in October.
The other Yankee FIGs in the high-grade
market on the same day as SMBC also got
decent investor reception.
Goldman Sachs, SMBC Nikko, Citigroup
and JP Morgan were joint lead managers for
SMFG’s SEC-registered offering. The same
banks also led SMBC’s 3(a)(2) offering.
SHANKAR RAMAKRISHNAN