The SEC-registered deal consists of a dollar tranche, a euro tranche and a yen tranche. Each tranche is being run by a different syndicate, with Merrill Lynch acting as the global coordinator.
The dollar-denominated tranche is led by JPMorgan and Merrill Lynch. Deutsche Bank, Merrill Lynch and Mitsubishi UFJ Securities are leading the euro tranche, while Merrill Lynch, Mitsubishi UFJ Securities and Nomura are running the yen tranche.
The deal is expected to be rated Baa2/BBB.
Roadshows in the US kicked off with two days of meetings in Los Angeles on March 2 and 3, before heading to the East Coast with meetings in Boston and Hartford on the 3rd. Meetings were then held in Philadelphia and New Jersey on Monday and wrapped up in New York on Tuesday and Wednesday. European roadshows were held in London on Monday, Frankfurt and Munich on Tuesday and Paris and Holland on Wednesday. Asian roadshows were held in Singapore and Hong Kong on Monday and Tuesday, respectively.
Although the size of each tranche has not yet been determined, it is expected that they will be benchmark size deals. Mitsubishi UFJ has announced that its capital requirement for the year sits between $2 billion-plus and $4 billion-plus. In terms of structure both the dollar and euro tranches will be perpetual non-call 10-year notes with step up coupons, while the yen tranche is also a perpetual but is not callable until year five.
Guidance for the dollar tranche has been set at 155bp over Treasuries, while the euro tranche is being marketed at 95bp to 100bp over mid-swaps. The yen dealÆs guidance has been set at 80bp to 85bp over mid-swaps.
Mitsubishi Tokyo Financial Group, then Japan's second largest banking group, and UFJ Holdings then JapanÆs fourth largest, merged last October to form the worldÆs largest banking group by assets, with a balance sheet of $1.8 trillion.
The combined entity had Ñ2.48 trillion ($21 billion) in non-performing loans on its balance sheet at the end of September, or 2.72 % of outstanding advances.
At the same period in 2004, Mitsubishi Tokyo Financial had Ñ1.63 trillion ($13 billion) in total NPLs, or 3.3% of outstanding advances, while UFJ had Ñ4.15 trillion ($35 billion) in NPLÆs or 9.42%.
As of September, Mitsubishi Tokyo Financial had a capital adequacy ratio (CAR) of 12.01%, up from 10.92% in 2004. UFJ saw its (CAR) increase to 11.67% from 9.9% a year earlier. On a combined basis, Mitsubishi UFJ's CAR stood at 12.0%.
With the completion of the merger, MUFJ has raised its net profit forecast to Ñ1.1 trillion and a return on equity of 18% by 2008.
