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Capital Markets

Japan's BTMU gets go-ahead to float panda bonds

Megabank unit to tap new yuan source via $154m offering

TOKYO -- Bank of Tokyo-Mitsubishi UFJ received approval from China's central bank to issue yuan-denominated bonds, becoming the second Japanese bank allowed to tap the country's capital market.

The Mitsubishi UFJ Financial Group unit plans to float 1 billion yuan ($154 million) in three-year straight bonds, targeting investors such as major Chinese banks. The Japanese megabank aims to diversify its options for obtaining yuan and create more opportunities to do business with local companies.

Japan's Financial Services Agency and China's Finance Ministry agreed in December on a framework for exchanging auditing information, opening the door for Japanese companies to issue yuan-denominated debt. Mizuho Bank announced plans for a panda bond offering that month.

Sending yen to China in exchange for yuan is often subject to Chinese regulations. Though panda bonds are not cheap to issue, they offer greater flexibility in procuring Chinese currency, as well as facilitate borrowing from other lenders.

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