Rakuten issues JPY 82 bn perpetual subordinated bonds

Rakuten Group, Inc. has finalized terms for its JPY 82 billion unsecured undated bonds. These bonds include interest payment deferral and optional redemption clauses, with special subordination clauses applicable in liquidation bankruptcy proceedings. With no fixed maturity date, the bonds are structured to be eligible for a 50% equity credit from rating agencies (R&I, JCR, and S&P Global Ratings Japan Inc.) due to their equity-like characteristics.

Proceeds from these new bonds will be used to redeem or repurchase USD 750 million of 5-year non-call undated subordinated notes issued in 2021, which have a first call date of April 22, 2026. The new bonds carry an interest rate of 4.691% per annum until October 23, 2030, after which it adjusts based on the one-year JGB Yield with additional spreads.

Interest payments, occurring biannually on April 23 and October 23, can be wholly or partially deferred at Rakuten’s discretion. Optional redemption of the entire bond is possible on each interest payment date from the first optional redemption date of October 23, 2030. The bonds carry subordinated claim rights in the event of the issuer’s liquidation or bankruptcy.