Chinese perps challenge international market

Chinese banks are expected to issue almost $21 billion in perpetual bonds this year. This will have a marked knock-on effect in the international capital markets.

The anticipated issuance of more than Rmb140 billion $20.9 billion perpetual bonds - fixed income debt with no maturity date - by Chinese banks will shake up the international perpetual bond market. 

All things being equal, such a large boost in the supply is likely to increase the cost of their issuance internationally, explained Alicia Garcia Herrero, Asia Pacific chief economist of Natixis.

“For the rest of the world, the question really is how many Chinese perpetual bonds will go offshore. Chinese banks will then compete with other major banks for capital which could drive up the cost,” Herrero said.

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