DEAL: Sumitomo Mitsui Bank's covered bonds

Author: Karry Lai | Published: 18 Oct 2018

Sumitomo Mitsui Banking Corporation (SMBC) has relied on a first-of-its kind legal framework to issue Japan’s inaugural covered bond, under a five-year €20 billion ($23.03 billion approximately) programme.

The country doesn’t currently have rules specific rules applying to this kind of debt, said a banking source close to the deal, and because there is no track record from a distribution point of view, the deal has been challenging.

The prospectus read: "Although the bonds to be issued under the programme share many of the characteristics of typical 'covered bonds' and have contractual recourse as a form of 'contractual covered bond,’ prospective investors should understand that the bonds do not constitute 'legislative covered bonds' for the purposes of any law or regulation in any jurisdiction and therefore should not be regarded as such for any such purposes by any person."

The banking source explained that...



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