Mizuho Bank is set to lend $3 billion to AT&T Inc. for the U.S. telecommunications firm to buy wireless airwaves in the United States in an auction later this year, sources said Tuesday.
The unit of Mizuho Financial Group Inc., Japan's second-largest banking group by assets, as been attempting to expand its overseas business.
It extended a $15 billion bridge loan to partly finance last year's $66 billion acquisition by U.S. specialty pharmaceutical company Actavis of its peer Alergan.
The Bank of Tokyo-Mitsubishi UFJ, Mizuho's larger domestic rival, is also looking to lend around $500 million to AT&T, the sources said.
The U.S. Federal Communications Commission plans to hold the spectrum auction later this year, which will be the first opportunity in years for wireless carriers to buy low-frequency airwaves, for which demand has been growing due to the diffusion of smartphones and tablet computers.
Part of the money to be raised in the auction will be paid back to TV stations, which would volunteer to relinquish airwaves.
Mizuho is responding to financing needs at AT&T, with the telecom giant expected to spend around $20 billion in the auction, according to the sources.
Mizuho's efforts to extend its overseas reach underscores the trouble Japanese lenders have been having with shrinking profit margins on domestic businesses. Interest rates are extremely low as a result of the Bank of Japan's aggressive monetary easing.