Bank of China's RMB 39.94 billion ($6.5 billion) additional
tier 1 (AT1) offering proved the depth of Asia's capital
markets. The bank's innovative structure has also set a
precedent for the rest of the industry.
This was the first AT1 sold by a Chinese bank, the first
offering of preference shares from a Chinese bank –
either offshore or onshore; and the largest AT1 globally
following the implementation of Basel III. The dollar-settled
bonds were priced to yield 6.75% and were listed on October
But the structure of these AT1s differs from those sold
elsewhere because they needed to comply with regulations from
the China Banking Regulatory Commission (CBRC) and China
Securities Regulatory Commission (CSRC), while also appealing
to fixed income investors.
The key features of the preference shares were largely
dictated by statutes of the CSRC and the CBRC, said Fang Liu,
partner at Clifford Chance....