Banks to Offer 128 Billion Yuan in a Two Week Bond Offering Spree
The top five banks in China will be raising 128 billion yuan in a two week bond offering spree after a year long hiatus and as regulators have signal a willingness for lenders that will aggressively tap the fixed income markets. The banking regulators started to phase in a new higher capital adequacy requirements last year in line with the global rules known as Basel III which is an aggressive implementation of the third Basel accord which is a key element in the county’s plan to fortify its banks against the risks of a slow economy.
China Construction Bank Corp. and the Agricultural Bank of China who are the second and third largest banks in the country has respectively announced their plans to raise 50 billion yuan worth of Basel III compliant Tier 2 capital using domestic bond issues. Bank of Communications the fifth biggest lender is also planning to raise 28 billion yuan by Monday next week. The bond issues will follow two of the largest offering as of last week from the top five banks in the country as China transition to Basel III.
Meanwhile last week the Industrial and Commercial Bank of China along with the Bank of China, the largest and fourth largest lenders have jointly offered a 50 billion yuan in bonds. The flurry of bond offering is showing that the Chinese regulators are signing of giant deals even with the potential drain in the market liquidity and are now comfortable with the Basel III compliant bond structure.