By Cristal Cody
Chicago, Feb. 28 – Sumitomo Mitsui Financial Group, Inc. priced $1 billion of 6.6% perpetual subordinated notes (Baa3/BB+) on Tuesday, according to an FWP filed with the Securities and Exchange Commission and details from a market source.
Price talk was in the 7% area, which was revised from earlier talk in the 7.25% area.
The first interest rate reset date will occur after 10 years. Starting June 5, 2034, the rate will reset to the five-year U.S. Treasury plus a margin of 228.3 basis points. Going forward, resets will occur every five years.
The notes priced at par to yield 6.602%, or at Treasuries plus 228.3 bps.
The notes will be redeemable at par on each interest rate reset date.
As subordinated notes, SMBC has the option to cancel interest payments.
SMBC Nikko Securities America, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the joint bookrunners.
Proceeds will qualify as additional tier 1 capital and will be advanced as a perpetual subordinated loan to SMBC. SMBC will use the proceeds for general corporate purposes.
The listing will be in Luxembourg.
The bank holding company for SMBC is based in Tokyo.
| Issuer: | Sumitomo Mitsui Financial Group, Inc.
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| Amount: | $1 billion
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| Issue: | Subordinated notes
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| Maturity: | Perpetual
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| Bookrunners: | SMBC Nikko Securities America, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and Citigroup Global Markets Inc.
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| Co-managers: | BofA Securities, Inc., HSBC Securities (USA) Inc., Barclays and BNP Paribas
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| Trustee: | Bank of New York Mellon
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| Counsel to issuer: | Davis Polk & Wardwell LLP and Nagashima Ohno & Tsunematsu
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| Counsel to underwriters: | Simpson Thacher & Bartlett LLP
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| Coupon: | 6.6% initial rate; resets June 5, 2034 to five-year Treasury plus 228.3 bps and on five-year anniversaries going forward
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| Price: | Par
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| Yield: | 6.602%
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| Spread: | Treasuries plus 228.3 bps
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| Call features: | On any rate reset date
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| Trade date: | Feb. 27
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| Settlement date: | March 5
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| Ratings: | Moody’s: Baa3
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| S&P: BB+
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| Distribution: | SEC registered
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| Price talk: | 7% area, revised from 7.25% area
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| Cusip: | 86562MDK3
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