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Bond sales by banks soar 241% to US$50b
By Louise Ho |
December 30, 2011, Friday
|
Print Edition
Print Edition
SUBORDINATED bond sales by Chinese banks more than doubled this year as a sluggish stock market forced lenders to turn to the bond market to raise funds for new capital adequacy requirement.
The total subordinated bonds issued by Chinese banks this year surged 241 percent year on year to 313.3 billion yuan (US$49.53 billion).
China's top five commercial banks raised 23.6 billion yuan through subordinated bonds and contributed to 75 percent of the total bond sales.
Until Tuesday, commercial banks have issued 258.9 billion yuan of subordinated bonds, according to Wind, a financial data provider.
The sales of subordinated bonds have also surged because banks have to bolster capital to meet a higher capital adequacy ratio next year.
The China Banking Regulatory Commission announced earlier this year that the new CAR for major banks is 11.5 percent, up from 9.5 percent now. Other banks have to meet 10.5 percent, up from 8.5 percent.
Five banks, including the Industrial and Commercial Bank of China, will issue another 54.3 billion yuan of subordinated bonds from Wednesday to today, according to Chinabond, a debt information website.
ICBC, the world's biggest lender by market value, will sell as much as 50 billion yuan of subordinated bonds, which have a lower priority than other bonds during liquidation but may generate higher returns. The shareholders of ICBC approved plans to raise 70 billion yuan by selling subordinated bonds through the end of June 30, 2012.
The two-day sale of ICBC's fixed-rate bonds started yesterday, including 10 billion yuan of 10-year bonds and 40 billion yuan of 15-year debt, said a statement posted on Chinabond on Monday.
ICBC has also issued the biggest amount of the bonds among Chinese banks this year at 88 billion yuan.
Banks preferred selling subordinated bonds than issuing shares because of the sluggish stock market.
The total subordinated bonds issued by Chinese banks this year surged 241 percent year on year to 313.3 billion yuan (US$49.53 billion).
China's top five commercial banks raised 23.6 billion yuan through subordinated bonds and contributed to 75 percent of the total bond sales.
Until Tuesday, commercial banks have issued 258.9 billion yuan of subordinated bonds, according to Wind, a financial data provider.
The sales of subordinated bonds have also surged because banks have to bolster capital to meet a higher capital adequacy ratio next year.
The China Banking Regulatory Commission announced earlier this year that the new CAR for major banks is 11.5 percent, up from 9.5 percent now. Other banks have to meet 10.5 percent, up from 8.5 percent.
Five banks, including the Industrial and Commercial Bank of China, will issue another 54.3 billion yuan of subordinated bonds from Wednesday to today, according to Chinabond, a debt information website.
ICBC, the world's biggest lender by market value, will sell as much as 50 billion yuan of subordinated bonds, which have a lower priority than other bonds during liquidation but may generate higher returns. The shareholders of ICBC approved plans to raise 70 billion yuan by selling subordinated bonds through the end of June 30, 2012.
The two-day sale of ICBC's fixed-rate bonds started yesterday, including 10 billion yuan of 10-year bonds and 40 billion yuan of 15-year debt, said a statement posted on Chinabond on Monday.
ICBC has also issued the biggest amount of the bonds among Chinese banks this year at 88 billion yuan.
Banks preferred selling subordinated bonds than issuing shares because of the sluggish stock market.
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