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
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...