# Mitsubishi UFJ to postpone AT1 bond issuance in Credit Suisse fallout
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-03
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Mitsubishi UFJ Postpones AT1 Debt Issuance After Credit
Meta Description: Find out why Mitsubishi UFJ Financial Group has postponed their AT1 debt issuance after Credit Suisse AT1 holders lost billions.
URL: https://financedigest.com/mitsubishi-ufj-to-postpone-at1-bond-issuance-in-credit-suisse-fallouthtml

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TOKYO (Reuters) – Mitsubishi UFJ Financial Group Inc <8306.T> has postponed the issuance of Additional Tier-1 (AT1) debt, a spokesperson said on Monday, making the bank one of the first to do so after Credit Suisse AT1 holders lost some $17 billion.

Mitsubishi UFJ decided on the postponement taking into account investor appetite and market conditions, the spokesperson said.

The transaction [planned for late April is now on hold](https://www.financedigest.com/heres-what-the-future-holds-for-financial-planning-analysis-teams.html "Here’s what the future holds for financial planning & analysis teams") until mid-May at the earliest, the spokesperson added.

He declined to comment on the planned issue amount.

[AT1 bonds](https://www.financedigest.com/stanchart-ceo-says-at1-bond-wipeout-has-profound-impact.html "StanChart CEO says AT1 bond wipeout has profound impact") – a $275 billion sector known as “contingent convertibles” or “CoCo” bonds – can be converted into equity or written off if a bank’s capital level falls below a certain threshold.

As part of the rescue of Credit Suisse by its rival UBS, [Swiss regulator FINMA determined that Credit Suisse’s](https://www.financedigest.com/swiss-franc-grapples-with-safe-haven-identity-crisis-after-credit-suisse.html "Swiss franc grapples with safe-haven identity crisis after Credit Suisse") AT1 bonds would be wiped out, a decision that surprised global credit markets as equity holders stand to recoup some of their money.

Reuters previously reported Mitsubishi UFJ and Sumitomo Mitsui [Financial Group](https://www.financedigest.com/mazars-to-acquire-financial-modelling-consultancy-and-training-provider-corality-financial-group.html "Mazars to acquire financial modelling consultancy and training provider, Corality Financial Group") were planning to issue AT1 bonds as early as this month but that the deals could be put on hold.

There are $69 billion worth of outstanding dollar-denominated AT1 bonds from [Asian Pacific banks](https://www.financedigest.com/asian-stocks-rally-as-bank-jitters-calm-alibaba-lifts-mood.html "Asian stocks rally as bank jitters calm, Alibaba lifts mood"), according to Goldman Sachs estimates, with mainland Chinese institutions accounting for 41% of total issuance.

Following [Credit Suisse’s rescue a number of global regulators and central banks](https://www.financedigest.com/explainer-what-are-credit-default-swaps-and-why-are-they-causing-trouble-for-europes-banks.html "Explainer-What are credit default swaps and why are they causing trouble for Europe’s banks?") sought to calm investors’ nerves by saying they would continue to impose losses on shareholders before bondholders.

Masahiko Kato, chairman of the Japanese Bankers Association and the head of Mizuho Bank, said on Monday the [Credit Suisse](https://www.financedigest.com/credit-suisse-54-billion-lifeline-offers-limited-respite-to-global-banks.html "Credit Suisse  billion lifeline offers limited respite to global banks") bond write-off was a special case where the AT1 bonds came with a clause warning investors they could be wiped out in the event of a government-backed bailout.

AT1 [bonds issued by Japanese banks](https://www.financedigest.com/bank-of-england-statement-on-purchase-of-long-dated-bonds.html "Bank of England statement on purchase of long-dated bonds") do not carry such clauses, he noted.

I believe there would be no immediate impact on Japanese [banks raising funds,”](https://www.financedigest.com/bank-funding-for-renewables-stagnates-vs-oil-and-gas-report.html "Bank funding for renewables stagnates vs oil and gas – report") he said.

(Reporting by Ritsuko Shimizu and Makiko Yamazaki; additional reporting Scott Murdoch; editing by Varun H K and Jason Neely)


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