Bank of Communications Completes First Offshore Issuance of Perpetual Bond by a Chinese Bank

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Big state-owned lender Bank of Communications (BOCOM) has become the first Chinese bank to issue perpetual bonds offshore.

BOCOM issued USD$2.8 billion in Basel III-compliant additional tier-1 capital bonds that were offered under Regulation S format and listed on the Hong Kong Stock Exchange on 11 November.

The instruments have no maturity date, although they have a call date after a five year period.

The AT 1 structure for the BOCOM issue is the first adopted by a Chinese issuer offshore. Under the structure the perpetual bonds will be written off without equity conversion in the case of a non-viability trigger event.

The Chinese central government first gave its approval to the issuance of perpetual bonds by Chinese banks at the start of 2019, in a bid to provide domestic lenders with more channels for capital replenishment.

As of mid-September 2020 Chinese banks had used perpetual bonds to raise nearly one trillion yuan in funds.

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