China banks lay the ground for dollar capital-eligible debt
Bankers and analysts believe the recent spate of US dollar bond issues from China’s banking sector is an effort to lay the groundwork for the sale of more Basel III-compliant securities.
Dollar offerings from Chinese banks could total as much as US$8bn this year, as issuers begin to ramp up their overseas profiles with an eye on building out their regulatory capital, according to bankers pitching for roles on the financings. “The goal is to develop a curve for the Chinese banks to raise capital,” said a credit analyst focused on Asian banks. “Banks will look to raise Tier 2 in the interim and Tier 1 ultimately,” the analyst added.
ICBC International, a unit of Industrial and Commercial Bank of China, sold a US$650m three-year Reg S dollar bond on February 25, while, earlier this year, Bank of Communications and Bank of China, Hong Kong branch, priced senior unsecured US dollar bonds. In December, Agricultural Bank of China (Hong Kong) sold US dollar senior bonds.
This wave of issuance came after two subdued years for senior bond sales by Chinese lenders, without a single overseas benchmark in 2012. ICBC Asia and China Citic Bank issued Basel III-compliant Tier 2 capital in US dollars last year, marking a tentative beginning to overseas capital raisings under the new Basel regime.
Article Title: China banks lay the ground for dollar capital-eligble debt
To see the original source of the article, please click here.
Originally published: March 4, 2014