MUFG targets global investors with US$4.6bn structured notes programme

Mitsubishi UFJ Financial Group (MUFG) has started offering structured notes to investors outside Japan for the first time, targeting institutional investors across Emea and Asia ex-Japan as it looks to broaden its funding sources and build an international structured products platform.

We are excited to be taking MUFG’s structured notes capability beyond Japan for the first time - Albert Chan

The US$4.6bn issuance programme from Japan’s largest bank will initially focus on interest rate and foreign exchange-linked structures, including principal-protected callable notes and callable range accruals.

MUFG said it expects the programme to expand in both size and scope as the business develops, with the bank seeing opportunities to add equity- and credit-linked structures and reach a broader range of institutional and wealth management investors.

“We are excited to be taking MUFG’s structured notes capability beyond Japan for the first time, with the goal of building a scalable international platform,” Albert Chan (pictured right), head of structured trading at MUFG, told SRP

While structured notes are well established, international investors have historically had limited access to MUFG credit through the format, Chan said.

The new programme is designed to provide investors with access to MUFG as “a highly rated issuer” while offering yield enhancement and tailored payoff profiles.

“We have seen strong early traction from clients, which reinforces our conviction that there is significant demand for greater diversification and access to new issuers in the market,” he said.

Broadening funding sources

The international structured notes programme forms part of MUFG’s wider strategy to expand its Global Markets business, according to Chan.

The initiative will diversify the bank’s investor base beyond Japan while broadening its funding sources across currencies beyond yen.

“It also allows us to leverage MUFG’s strong balance sheet and credit profile,” he said.

Chan added that the programme represents an important step towards building a broader structured products platform to support MUFG’s international growth ambitions.

The initial target market comprises institutional investors including pension funds, insurers and banks seeking to diversify their credit exposure while enhancing portfolio returns.

MUFG also sees opportunities through wealth management channels, particularly private banks and distribution platforms.

Its distribution strategy combines the bank’s global and affiliate networks with third-party distributors, allowing it to access investors across Emea and Asia.

“Early interest has been particularly encouraging in markets such as Taiwan, where investors are actively seeking diversification from traditional issuers,” Chan said.

Rates and FX

MUFG will initially concentrate on rates- and FX-linked structures, which Chan said can provide institutional investors with enhanced yields and greater flexibility than traditional fixed-income investments.

“Institutional investors are increasingly seeking solutions that can deliver enhanced yields while meeting their specific risk and return objectives,” he said.

Structured notes linked to rates and FX markets can offer tailored payoff profiles while providing exposure to MUFG’s credit, he added.

The bank believes its credit profile is particularly relevant in a market where investors have a relatively limited pool of issuers to choose from.

Demand for yield

The expansion comes as institutional investors continue to seek sources of enhanced yield and portfolio diversification amid changing interest rate and volatility conditions.

MUFG said it continues to see strong demand for products that can enhance returns while maintaining exposure to high-quality issuers.

“In the current environment, structured notes can offer an attractive yield pick-up relative to deposits or conventional fixed-income investments, while allowing investors to tailor exposures to their specific investment objectives,” Chan said.

He expects demand for differentiated sources of yield and portfolio diversification to remain an important theme as market conditions evolve.

Platform to expand

MUFG is positioning the programme as a scalable international franchise rather than focusing on a single market.

The bank currently offers rates- and FX-linked structures but sees scope to broaden the platform as client demand develops.

“We intend to explore additional asset classes, including equity-linked and credit-linked structures,” Chan said.

The bank also expects to expand its reach across institutional and wealth management channels, supported by MUFG’s global distribution network.

The international programme therefore represents both a new source of structured note issuance for MUFG and a broader effort to establish the bank as a more visible issuer among institutional structured products investors outside Japan.

_{Image: Tamayura39/Adobe Stock}

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