China Merchants Bank builds buffer vs bad debt with AT1

The Shenzhen-based lender manages to sell an aggressively-priced $1 billion deal to investors, even as a surge in lending worries regulators.

China Merchants Bank, a Shenzhen-based lender, raised $1 billion from the sale of a perpetual non-call five-year additional tier-1 bond on Thursday, building a capital buffer against the growth of bad debt in what seems a politically smart move.

The Reg S deal comes at the time when China's political heavyweights are attending the biggest political event in five years in Beijing, the 19th communist party congress.

One of the widely-discussed issues at the congressional meeting is the pace of deleveraging in the corporate sector. Key policy makers, including the People’s Bank of China governor Zhou Xiaochuan, have recently warned of the rising financial leverage among...

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