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China's top banks unleash US$43.5bn bank capital onslaught 

August 7, 2014
Lianting Tu, IFR Asia

China threw open the doors to the world’s biggest market for so-called “bail-in” bonds this week with a landmark subordinated bond from the country’s top bank.

Industrial and Commercial Bank of China, the world’s largest bank by assets, priced a Rmb20bn (US$3.2bn) Tier 2 bond on Tuesday. The domestic offering is the first from one of China’s top five banks since it began the transition to Basel III standards at the start of 2013.

After a long wait, ICBC’s deal promises to unblock a heavy pipeline of capital raisings as China’s biggest banks replace maturing securities and shore up their capital to keep pace with quickening credit growth.

The top five banks have announced plans to raise a combined US$43.5bn of Tier 2 capital by the end of 2015, split between onshore and offshore markets. Bank of China said it would raise Rmb30bn of Tier 2 capital in a similar onshore transaction this Friday, suggesting those deals are likely to arrive sooner rather than later.

Read more: IFR Asia

 
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