What drove the timing of this transaction, how did you settle on market selection, and what provided you with comfort that you would achieve a pleasing outcome in Australian dollar SEC-registered format?

As a financial institution it is a basic rule, but one we consider crucial, to diversify our investor base across both market and currency to ensure stability in our funding.

Also, as a global systemically important bank, SMFG must comply with TLAC regulation and this means we must build up TLAC-eligible bonds to meet this requirement without delay. After having issued SEC-registered, US dollar-denominated TLAC bonds and euro-denominated TLAC bonds out of our EMTN programme, we have been looking for another market that fits our policy and objectives.

Now that the Sydney branch of our subsidiary, Sumitomo Mitsui Banking Corporation (SMBC) is the biggest branch in our Asian franchise in asset terms, our funding requirement in Australian dollars was also a consideration. All the funds raised by issuing SEC-registered Australian dollar TLAC notes were delivered to SMBC’s Sydney branch. Thus we could achieve our objectives of diversifying into TLAC investors in Australia as well as meeting the long-term funding requirement of our Sydney branch.

We understand continuous access to the market is important and we plan to come back to the Australian market regularly in the future.

How did final volume line up with your initial expectations and how would you characterise the pricing experience in the Australian market?

To be honest, the book size was more than we initially expected and therefore we increased issuance volume from the initial target of A$500 million. The size of the book was great but its quality was equally impressive.

Pricing level was also carefully considered. After meeting with investors in Australia, we felt it was important to enter the market with the right pricing level to attract demand. We also found the Australian dollar credit market and its investors are very sophisticated and relative value was carefully considered.

What were the main questions Australian investors asked in the lead-up to the deal?

We met local investors on a nondeal roadshow in Sydney and Melbourne prior to launch. The roadshow helped us gauge interest in this type of transaction and we tried our best to demonstrate how the Japanese TLAC framework and resolution regime works.

The top three questions related to Japanese bank holdco or TLAC debt we were asked by investors were the following. What are the SMFG’s TLAC funding plans going forward and what is the amount of TLAC buffer? Related to the point of nonviability, what is SMFG’s resolution regime and how does it relate to pricing? Finally, what are your past experiences of the Japanese government’s equity injection into Japanese banks?

How did you go about price discovery for this transaction given it was being issued in a new, foreign currency and the relatively untested nature of the product with Australian dollar investors?

We had a long discussion around price discovery. We first looked at Japanese banks’ Australian dollar-denominated transferable certificate of deposit pricing out of the operating company, as developed by SMBC Sydney Branch in a sustained effort over the past five years. We then added a TLAC premium, substantiating the – minimal – rating differential.

Separately, we looked at SMFG’s US dollar-denominated TLAC bonds, issued in January this year. We also took into consideration the secondary level of US banks’ SEC-registered Australian dollar bonds.

As far as I am aware, the recent tier-three transaction into Australia by BNP Paribas in EMTN format was not used by local investors as a comp for our transaction.