Japan's Sumitomo Mitsui Financial Group Inc. issued 1 billion yen (140 million euros) worth of AT950 bonds, becoming the first major bank in the world to issue such bonds since the Credit Suisse crisis in mid-March. Globally, AT1 bonds have recovered in recent weeks.

The issuance is one of the largest transactions in the yen corporate bond market this year, indicating stable demand in Nippon for riskier bank bonds. Another major bank, Mitsubishi UFJ Financial Group Inc., plans to issue a two-part AT1 bond in mid-May.

Swiss banking regulator Finma had written off 1 billion Swiss francs of AT16 bonds at Credit Suisse because state aid also played a role in the bank's emergency takeover by local rival UBS — an unprecedented act on this scale in the European AT1 market.

"The transaction shows that Japan's AT1 market remains open and megabanks are still able to issue subordinated securities at relatively low spreads," says Pri de Silva of Bloomberg Intelligence. "The global AT1 bond market is, in a way, segmented by geography. Nevertheless, this is a step in the right direction for the sector."

AT1 bonds, also known as contingent convertibles or CoCo bonds, are the riskiest bonds issued by banks. That's because they can be used to offset losses or convert them into shares when a bank's capital ratios fall below a certain level. Regulators can also write them off if a bank starts to fail.

According to syndicate leader SMBC Nikko Securities Inc., SMFG has issued both 89 billion yen in perpetual bonds that cannot be called for five years and two months, and 51 billion yen in securities that cannot be called for 10 years and two months. Both were priced at a premium of 171 basis points. The SMFG's last such deal took place in December, when 107 billion yen was issued in two parts with spreads of no more than 148.3 basis points.

The fact that SMFG sold a larger portion of the bonds with an earlier call date is an indication that investors even in Japan prefer safer bonds after the recent market turmoil, according to Kazuma Ogino, a senior analyst at Nomura Securities Co.

SMFG is one of the 30 global systemically important banks. No institution in this round has issued an AT1 bond since UBS's acquisition of Credit Suisse, according to Bloomberg data.