Mitsubishi UFJ Financial Group, Inc. (MUFG), one of the world’s leading financial groups, announced that MUFG Union Bank, N.A., the primary banking subsidiary of MUFG Americas Holdings Corporation, has closed a $1 billion bank note offering.
The two-tranche transaction is structured as a $700 million fixed rate bank note with a coupon of 2.10 percent per year (US Treasury +50 basis points), maturing on December 9, 2022, and a $300 million floating rate bank note with a coupon tied to the Secured Overnight Financing Rate (SOFR) plus a spread of 71 basis points, also maturing on December 9, 2022.
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SOFR is a benchmark established in April 2018 by the Federal Reserve Bank of New York that provides a measure of the cost of financing U.S. Treasury securities overnight. It is anticipated to serve as an alternative reference rate to the US dollar London Interbank Offered Rate (USD LIBOR), which the United Kingdom Financial Conduct Authority has signaled could be phased out by the end of 2021.
“While our full debt offering was met with strong demand from a broad and diverse investor base, the SOFR-tied tranche is particularly ground breaking,” said John Trohan, Treasurer, MUFG Americas Holdings Corporation and MUFG Union Bank, N.A. “We are pleased by the market’s response to MUFG’s first SOFR note issuance and the fact that this issuance involved the longest non-redeemable term for any floating-rate note yet to reference SOFR.”
MUFG Securities Americas Inc. (billing and delivering agent) and Morgan Stanley & Co. LLC acted as joint bookrunners for the offering. Citigroup Global Markets Inc. acted as passive joint bookrunner for the offering and Academy Securities, Inc., BofA Securities, Inc., Barclays Capital Inc. and Wells Fargo Securities, LLC acted as co-managers for the offering. MUFG Union Bank, N.A. intends to use the net proceeds from this offering for general corporate purposes, including working capital and capital expenditures.
