Sumitomo Mitsui subsidiaries price tender offer for bonds, preferreds

By Angela McDaniels

Tacoma, Wash., Jan. 25 - Sumitomo Mitsui Financial Group, Inc. said that the purchase prices have been set in the tender offers being held by three of its subsidiaries for some of their debt securities.

Included in the offers are Sumitomo Mitsui Banking Corp.'s $1.35 billion of fixed- to floating-rate perpetual subordinated bonds and €700 million of fixed- to floating-rate perpetual subordinated bonds, SMFG Preferred Capital USD 1 Ltd.'s $1.65 billion of non-cumulative perpetual preferred securities and SMFG Preferred Capital GBP 1 Ltd.'s £500 million of non-cumulative perpetual preferreds.

According to a company news release, the purchase prices are:

• $1,067.87 per $1,000 principal amount of the dollar-denominated bonds. The tender offer yield is 4.612%;

• €976.01 per €1,000 principal amount of the euro-denominated bonds. The tender offer yield is 5.159%;

• $954.36 per $1,000 liquidation preference of the dollar-denominated preferreds. The tender offer yield is 6.959%; and

• £911.66 per £1,000 liquidation preference of the pound-denominated preferreds. The tender offer yield is 7.910%.

The prices include an early tender premium of $50.00, €50.00 or £50.00 for each security tendered by 9 a.m. ET on Jan. 22, the early tender date.

As of the early tender date, holders had tendered $1,021,147,000 principal amount, or 75.64%, of the dollar-denominated bonds, €368,635,000 principal amount, or 52.66%, of the euro-denominated bonds, $989,429,000 liquidation preference, or 59.97%, of the dollar-denominated preferreds and £426,424,000 liquidation preference, or 85.28%, of the pound-denominated preferreds.

The purchase price for each security equals the present value of par and all remaining interest or dividend payments up to and including its earliest optional redemption date, discounted to the expected payment date at a discount rate equal to the applicable tender offer yield.

The tender offer yield for each security was determined using the yield to maturity of the applicable reference security calculated based on the bid-side price of that reference security at 9 a.m. ET on Jan. 22 plus a spread.

The earliest optional redemption date is Oct. 15, 2015 for the bonds and Jan. 25, 2017 for the preferreds.

The spread is 225 basis points for the dollar-denominated bonds, 300 bps for the euro-denominated bonds, 335 bps for the dollar-denominated preferreds and 400 bps for the pound-denominated preferreds.

The reference security is the 2.625% U.S. Treasury due Dec. 31, 2014 for the dollar-denominated bonds, the 2.5% German Obligations due Oct. 10, 2014 for the euro-denominated bonds, the 3.375% U.S. Treasury due Nov. 15, 2019 for the dollar-denominated preferreds and the 4.5% U.K. Treasury due March 7, 2019 for the pound-denominated preferreds.

The offers began Jan. 7 and will expire at 11:59 p.m. ET on Feb. 4.

The tender offers are subject to the consummation of a common stock offering by Sumitomo Mitsui Financial Group.

In the United States, Goldman Sachs & Co. (800 828-3182) is the lead dealer manager and structuring agent and UBS Securities LLC (203 719-4210) is the co-dealer manager. Outside the United States, Goldman Sachs International (+44 20 7552 9912) is the lead dealer manager and structuring agent and UBS Ltd. (+44 20 7567 0525) is the co-dealer manager.

Global Bondholder Services Corp. (866 387-1500) is the information agent for the dollar-denominated securities, and Lucid Issuer Services Ltd. (+44 20 7704 0880) is the information agent for the remaining securities.

Sumitomo Mitsui Financial Group is a financial services company based in Tokyo.

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