MUFG to Issue Public Offering Digital Unsecured Subordinated Bond as a Security Token Via Progmat
MUFG has announced that, as part of preparations to issue the “Mitsubishi UFJ Financial Group 1st series unsecured subordinated security token bond with optional-redemption clause, write-down upon the occurrence of a non-viability event clause and transfer restriction clause” (the ST Bond), it has submitted an amended registration statement to the Director-General of the Kanto Local Finance Bureau.
The ST Bond is expected to be Tier 2 capital eligible under the Basel III International Regulations. The issuance will be the first publicly offered security token bond issued by MUFG and is expected to be the first of its kind issued in the Japanese banking sector.
1. Background
In its Medium-term Business Plan (FY2024-FY2026) released in April 2024, MUFG outlined its aim to “Expand & Refine Growth Strategies” with the focuses: “Contribute to Making Japan a Leading Asset Management Center” and “Challenge to Build a New Business Portfolio.” As such, MUFG Group aims to explore new business opportunities in the digital asset domain and provide value and experiences that align with the increasingly sophisticated and diverse needs of its customers.
As a Group, MUFG has been keeping an eye on the future of security tokens. Mitsubishi UFJ Trust and Banking (MUTB) is the largest provider of trust and custody services for digital assets in Japan, and is one of the major shareholders of Progmat, which provides the Progmat digital asset issuance and management platform. Additionally, Mitsubishi UFJ Morgan Stanley Securities (MUMSS) is advancing the establishment of a system for underwriting and selling digital assets, promoting the digital securitization of real estate and corporate bonds.
2. Objective and Overview
As part of its commitment to sound capital management, MUFG has issued a series of Tier 2 subordinated bonds in compliance with Basel III regulations. Although MUFG has received strong support from both retail and institutional investors, with stable capital management being essential, it recognizes the importance of providing investment opportunities and products that cater to the diverse needs of customers. In this context, MUFG has decided to issue the ST Bond to foster a better understanding of and interest in its capital funding among a broader range of investors.
The digital asset market in Japan is rapidly evolving, supported by both the public and private sectors. MUFG believes that the issuance of the ST Bond will contribute to the further development of Japan's capital markets. The sale of the upcoming ST Bond will be managed by MUMSS.
MUFG is committed to completing the entire process of product development, issuance, and sale of the ST Bond as a unified Group, contributing to the further development of Japan's digital financial market.
Norbert Gehrke
