Japanese Banks Prepare Record AT1 Bond Issuance in Fiscal 2026 to Meet Higher Capital Rules
Updated
Updated · Bloomberg · May 29
Japanese Banks Prepare Record AT1 Bond Issuance in Fiscal 2026 to Meet Higher Capital Rules
2 articles · Updated · Bloomberg · May 29
Japan’s major banks are heading for their busiest fiscal year in more than a decade for Additional Tier 1 bond sales, marking a record issuance wave to bolster regulatory capital.
Those AT1 bonds help lenders meet higher capital requirements by raising loss-absorbing funds without issuing common equity.
The securities sit near the bottom of banks’ debt stacks and can be converted into equity if a lender’s capital ratio drops below a set threshold, making them among the riskiest forms of bank debt.
The planned surge underscores how tighter capital demands are driving Japanese lenders toward hybrid funding instruments in fiscal 2026.
With record profits, why are Japan's top banks now issuing their riskiest and most expensive form of debt?
While Japan bolsters its banks, why are US regulators pushing to lower capital requirements for their own?
After Credit Suisse investors were wiped out, could Japan's new 'bail-in' bonds face a similar fate?