BoCom debuts first Chinese Basel III dollar bond

The $1.2 billion Tier 2 offering will set the benchmark for other Chinese banks to tap international markets for funds, boosting capital buffers as asset quality weakens.
BoCom is China’s fifth largest bank in terms of assets
BoCom is China’s fifth largest bank in terms of assets

Bank of Communications raised a $1.2 billion 10-year bond note on Wednesday, the first major Chinese bank to issue a Basel III-compliant Tier 2 note from its head office.

The Reg S offering callable in year five priced at Treasuries plus 285bp, which is 5bp tighter than its initial price guidance, according to a source familiar with the matter. Its yield is 4.628% and coupon is 4.5%.

As a Basel III-compliant bond with loss absorption features triggers where investors could lose all their money if regulators decide the bank cannot survive BoCom’s Tier 2 bonds will be rated BBB by Fitch,...

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