China Construction Bank Issues 80B Yuan in Tier 2 Capital Bonds

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One of China’s big state-owned banks has just completed a large-scale bond issue to raise funds for its tier-2 capital reserves.

China Construction Bank (CCB) completed its issue of 80 billion yuan (USD$12.35 billion) in tier-2 capital bonds via the interbank bond market on 10 August.

The issue encompassed 65 billion yuan in 10 year bonds with a coupon rate of 3.45% and conditional issuer redemption rights from the end of the fifth year; and 15 billion yuan in 15 year bonds with a coupon rate of 3.80%, and conditional issuer redemption rights from the end of the tenth year.

The rate for the 10 year bonds marks a spread of 47 basis points compared to China Development Bank (CDB) bonds of the same tenure, while the rate for the 15 year bonds marks a spread of 62 basis points.

The 10 year bonds were 1.6 times oversubscribed, while the 15 year bonds were 3.2 times oversubscribed. More than 160 financial institutions took part in the bidding, including foreign invested players from Singapore, Hong Kong, Macau and Taiwan.

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