The Japanese bank will obtain necessary clearance to issue a total of up to $500 million in Sukuk.
BTMU is considering floating bonds denominated in dollars and yen this summer, targeting Middle Eastern pension funds and Islamic insurance companies, among others.
This will mark the first issuance of yen-denominated Sukuk. The bank expects demand from investors seeking to diversify. Growth in Sukuk could provide a channel for Japan to attract Islamic money.
The move is aimed at tapping into the rapidly growing Islamic financial market, which has been expanding at double-digit rates. Assets in the market have shot up 130% in five years.
In Malaysia, more than 20% of loans comply with Islamic rules, and lenders are encouraged to procure funds following the rules. Proceeds from BTMU’s bonds will go toward providing loans to infrastructure and energy-related development projects.