2020 has seen the copious issuance of bonds by Chinese banks to shore up their tier-2 capital levels.
Data from iFinD indicates that a total of 11 banks have already issued tier-2 capital bonds worth 95.73 billion yuan since the start of 2020.
Bank of Communications and Agricultural Bank of China have both issued 40 billion yuan in tier-2 capital bonds, while small and medium-sized banks have tended to pursue issues of under 500 million yuan.
At least 10 other banks have obtained approval from regulators to collectively issue up to 68.8 billion yuan in tier-2 capital bonds, including China CITIC Bank and Bank of Ningbo.
Jin Yi (靳毅), chief macro-bond analyst with Guohai Securities said that a number of banks, and small and medium-sized banks in particular, are facing considerable capital supplementation pressure, leading to an acceleration in the issuance of tier-2 capital bonds.
“This will enable banks to more vigorously engage in credit extension, which will help micro, small and medium-sized banks to resume work and production.”