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China's ICBC Sells Riskier Bonds 

August 5, 2014
Fiona Law, Wall Street Journal

China's largest bank is selling a type of risky bond that is relatively new to local investors, the latest move by lenders to raise cash and beef up their capital buffers as the economy slows and bad debt mounts.

The bond being issued by Industrial & Commercial Bank of China Ltd. complies with tough new global capital rules, known as Basel III, and is thought to carry more risk than regular debt. Holders of Basel III-compliant bonds would be first to lose money if the issuer's national regulator determined that the lender can't survive or that the bank would need a government bailout to stay afloat.

The rules are intended to make bondholders bear the burden before taxpayers.

ICBC's sale will be closely watched by investors and other potential issuers for clues to demand and pricing. Should demand be strong, it will pave the way for peers to sell similar debt in the domestic market.

Read more: Wall Street Journal

 
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