Resona Holdings Inc. announced Friday it will raise about 250 billion yen by issuing subordinate bonds to U.S., European and Asian institutional investors this month to return part of the 3.1 trillion yen in public funds it owes to the government.

Bids for the subordinate bonds to be issued in dollars and euros by its core banking unit, Resona Bank, are being accepted and have so far eclipsed the issued amount by five times, the group said.

Of the 3.1 trillion yen in government aid, 300 billion yen is in the form of subordinated loans to the former Daiwa Bank and Asahi Bank, the two core institutions that created the Resona group.

The group is expected to use most of the proceeds from the new bond issue to return part of the subordinated loans, according to industry sources.

The planned repayment will effectively serve as refinancing because the interest rates on the government’s subordinated loans are now higher than market rates for comparable financial products.

The planned issuance will mark Resona’s second repayment of the public funds. The banking group returned just 2.7 billion yen in February.

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